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 June 29, 1997
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 August 6, 1997:
Class Number of Shares
----- ----------------
Class A Common Stock, $.10 par value per share 21,095,096
Class B Common Stock, $.10 par value per share 2,952,007
1<PAGE>
INTERFACE, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets - June 29, 1997 and December 29, 1996 3
Statements of Income - Three Months and Six Months Ended 4
June 29, 1997 and June 30, 1996
Statements of Cash Flows - Six Months 5
Ended June 29, 1997 and June 30, 1996
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 11
Financial Condition and Results of Operations
PART II. OTHER INFORMATION II.
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
_________________________________________
THIS FORM 10-Q CONTAINS STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. ANY SUCH FORWARD-
LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS,
INCLUDING THE RISKS AND UNCERTAINTIES DISCUSSED IN THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR ITS FISCAL
QUARTER ENDED MARCH 30, 1997, UNDER THE CAPTION
"CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS"
IN ITEM 5, WHICH DISCUSSION IS INCORPORATED HEREIN BY
THIS REFERENCE.
2<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 29, DECEMBER 29,
ASSETS 1997 1996
- ------ ------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 9,816 $ 8,762
Accounts Receivable 163,936 167,817
Inventories 153,383 146,678
Deferred Tax Asset 7,003 7,057
Prepaid Expenses 25,768 22,986
-------- --------
TOTAL CURRENT ASSETS 359,906 353,300
PROPERTY AND EQUIPMENT, less
accumulated depreciation 216,065 208,791
EXCESS OF COST OVER NET ASSETS ACQUIRED 246,009 249,070
OTHER ASSETS 58,744 51,385
-------- --------
$880,724 $862,546
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $8,448 $14,918
Accounts Payable 73,639 74,960
Accrued Expenses 69,771 70,919
Current Maturities of Long-Term Debt 2,230 2,919
-------- --------
TOTAL CURRENT LIABILITIES 154,088 163,716
LONG-TERM DEBT, less current maturities 276,037 254,353
SENIOR SUBORDINATED NOTES 125,000 125,000
DEFERRED INCOME TAXES 24,355 23,484
-------- --------
TOTAL LIABILITIES 579,480 566,553
-------- --------
Minority Interest 3,125 3,125
Redeemable Preferred Stock - 19,750
Common Stock 2,715 2,536
Additional Paid-In Capital 153,580 124,557
Retained Earnings 178,079 166,828
Foreign Currency Translation Adjustment (18,509) (3,057)
Treasury Stock, 3,600
Class A Shares, at Cost (17,746) (17,746)
-------- --------
$880,724 $862,546
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3<PAGE>
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 29 JUNE 30, JUNE 29, JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $271,746 $237,488 $529,091 $442,505
Cost of Sales 182,342 162,824 356,774 304,928
-------- -------- -------- --------
Gross Profit on Sales 89,404 74,664 172,317 137,577
Selling, General and Administrative Expenses 66,855 55,635 129,811 104,977
-------- -------- -------- --------
Operating Income 22,549 19,029 42,506 32,600
Other (Expense) Income - Net (9,606) (8,986) (19,149) (16,578)
-------- -------- -------- --------
Income before Taxes on Income 12,943 10,043 23,357 16,022
Taxes on Income 4,983 4,018 9,044 6,289
-------- -------- -------- --------
Net Income 7,960 6,025 14,313 9,733
Less: Preferred Dividends -- 429 -- 866
-------- -------- -------- --------
Net Income Applicable to Common Shareholders $ 7,960 $ 5,596 $ 14,313 $ 8,867
======== ======== ======== ========
Primary Earnings Per Common Share $0.34 $0.29 $0.62 $0.47
======== ======== ======== ========
Weighted Average Common Shares Outstanding 23,620 19,401 23,102 18,938
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4<PAGE>
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 29, JUNE 30,
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $14,313 $9,733
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 16,779 16,751
Deferred income taxes 226 169
Cash provided by (used for):
Accounts receivable 301 (2,697)
Inventories (9,116) (8,157)
Prepaid and other (3,782) (3,357)
Accounts payable and accrued expenses 1,282 10,955
------- -------
20,003 23,397
------- -------
INVESTING ACTIVITIES:
Capital expenditures (22,038) (19,377)
Acquisitions of businesses (14,698) (30,916)
Other (4,366) (5,836)
------- -------
(41,102) (56,129)
------- -------
FINANCING ACTIVITIES:
Net borrowing (reduction) of long-term debt 16,086 35,449
Issuance of common stock 9,458 500
Dividends paid (3,061) (3,141)
------- -------
22,483 32,808
------- -------
Net cash provided by (used for) operating,
investing and financing activities 1,384 76
Effect of exchange rate changes on cash (330) -
------- -------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period 1,054 76
Balance at beginning of period 8,762 8,750
------- -------
Balance at end of period $9,816 $8,826
------- -------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5<PAGE>
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - CONDENSED FOOTNOTES
As contemplated by the Securities and Exchange
Commission (the "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
29, 1996, as filed with the 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:
JUNE 30, DECEMBER 29,
1997 1996
---- ----
Finished Goods $ 84,082 $ 81,034
Work-in-Process 30,623 30,464
Raw Materials 38,678 35,180
-------- --------
$153,383 $146,678
======== ========
NOTE 3 - BUSINESS ACQUISITIONS
During the second quarter of 1997, the Company acquired
100% of the outstanding capital stock of four floorcovering
contractors -- Floormart, Inc., based in Glendale, California;
Canaan Corporation, based in Hamden, Connecticut; Carpet Services
of Tampa, Inc., based in Tampa, Florida; and Carpet Solutions
Holdings Pty Ltd., based in Brisbane, Queensland, Australia. As
consideration, the Company issued 155,022 shares of Class A
Common Stock valued at approximately $2.1 million and paid $5.3
million in cash. (The Company also paid $6.2 million in the
second quarter of 1997 in connection with acquisitions completed
in prior periods.) All of the acquisitions were accounted for as
purchases; accordingly, the results of operations for the
acquired companies are included in the Company's consolidated
financial statements from the respective dates of the
acquisitions. The excess of the purchase price over the fair
value of the net assets acquired will be amortized over 25 years.
During fiscal 1996, the Company acquired 100% of the
outstanding capital stock (and, in one case, all of the assets)
of fifteen 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 Installations, Inc., based in New Jersey;
Lasher/White Carpet Co., Inc., based in New York; Oldtown Carpet
Center, Inc., based in North Carolina; Architectural Floors, a
division of Continental Office Furniture Corp., based in Ohio;
and Floor Concepts, Inc., based in Maryland. As consideration,
the Company issued 2,674,906 shares of Class A Common Stock
valued at approximately $19.3 million and $.8 million in 7%
Notes, and paid $23.0 million in cash. All of the acquisitions
were accounted for as purchases; accordingly, the results of
operations for the acquired companies are included in the
Company's consolidated financial statements from the respective
dates of the acquisitions. The excess of the purchase price over
the fair value of the net assets acquired was approximately $33.9
million and is being amortized over 25 years.
In February 1996, the Company acquired 100% of 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 $6 million
in cash ($4 million in February 1996 and $2 million in February
1997). 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 acquired was approximately $4.3
million, and is being amortized over 25 years.
6<PAGE>
In February 1996, the Company acquired all of the
outstanding common stock of C-Tec, Inc., a Michigan-based
producer of raised/access flooring systems, for approximately
$8.8 million (comprised of $4.5 million in cash and $4.3 million
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 assets acquired was
approximately $3.1 million, 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 Preferred
Stock issued in June 1993 and redeemed in December 1996 (see Note
5 below) 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).
NOTE 5 - REDEEMABLE PREFERRED STOCK
In December 1996, the Company notified the holders of
its Series A Preferred Stock that it intended to redeem up to $10
million of the approximately $19.7 million (face value) Series A
Preferred Stock then outstanding. As a result of this notice,
the Series A preferred shareholders, with one exception, instead
elected to convert their shares of Series A Preferred Stock into
an aggregate of approximately 1,360,000 shares of the Company's
Class A Common Stock. The shares of Series A Preferred Stock
owned by the non-converting shareholder were redeemed for
approximately $6,000.
7<PAGE>
NOTE 6 - 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 6 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 29, 1997
INTERFACE, CONSOLIDATION
NON- INC. AND
GUARANTOR GUARANTOR (PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION) ENTRIES TOTALS
------------ ------------ ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales $431,171 $164,124 $ - (66,204) $529,091
Cost of sales 310,931 112,047 - (66,204) 356,774
-------- -------- -------- --------- --------
Gross profit on sales 120,240 52,077 - - 172,317
Selling, general and administrative 88,846 33,590 7,375 - 129,811
expenses -------- -------- -------- --------- --------
Operating income 31,394 18,487 (7,375) - 42,506
Other expense (income)
Interest Expense 5,294 2,208 9,975 - 17,477
Other 2,639 1,287 (2,254) - 1,672
-------- -------- -------- --------- --------
Total other expense 7,933 3,495 7,721 - 19,149
-------- -------- -------- --------- --------
Income before taxes on income and
Equity in income of subsidiaries 23,461 14,992 (15,096) - 23,357
Taxes on income 9,262 5,727 (5,945) - 9,044
Equity in income of subsidiaries - - 23,464 (23,464) -
-------- -------- -------- --------- --------
Net income applicable to common $ 14,199 $ 9,265 $ 14,313 ($23,464) $ 14,313
shareholders ======== ======== ======== ======== ========
</TABLE>
8<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEET
JUNE 29, 1997
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 $ 4,219 $ 5,597 $ - $ - $ 9,816
Accounts receivable 119,806 62,629 (18,499) - 163,936
Inventories 107,486 45,897 - - 153,383
Miscellaneous 9,279 14,167 9,325 - 32,771
-------- -------- -------- ----------- --------
Total current assets 240,790 128,290 (9,174) - 359,906
Property and equipment,
less accumulated depreciation 152,339 57,782 5,944 - 216,065
Investment in subsidiaries 108,977 17,775 381,670 (508,422) -
Miscellaneous 135,498 37,108 378,702 (492,564) 58,744
Excess of cost over net assets 175,461 66,510 4,038 - 246,009
acquired -------- -------- -------- ----------- --------
$813,065 $307,465 $761,180 $(1,000,986) $880,724
======== ======== ======== =========== ========
LIABILITIES AND COMMON
SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 8,448 $ - $ - $ - $ 8,448
Accounts payable 48,413 20,251 4,975 - 73,639
Accrued expenses 42,055 33,335 (5,619) - 69,771
Current maturities of long- 2,230 - - - 2,230
term debt -------- -------- -------- ----------- --------
Total current liabilities 101,146 53,586 (644) - 154,088
Long-term debt, less
current maturities 228,684 32,842 293,678 (279,167) 276,037
Senior subordinated notes - - 125,000 - 125,000
Deferred income taxes 12,830 958 10,567 - 24,355
Minority interests 3,125 - - - 3,125
-------- -------- -------- ----------- --------
Total liabilities 345,785 87,386 428,601 (279,167) 582,605
Redeemable preferred stock 57,891 - - (57,891) -
Common stock 81,704 102,199 2,715 (183,903) 2,715
Additional paid-in capital 183,612 11,030 153,580 (194,642) 153,580
Retained earnings 149,493 117,677 178,079 (267,170) 178,079
Foreign currency translation (5,420) (10,827) (1,795) (467) (18,509)
adjust.
Treasury stock - - - (17,746) (17,746)
-------- -------- -------- ----------- --------
$813,065 $307,465 $761,180 $(1,000,986) $880,724
======== ======== ======== =========== ========
</TABLE>
9<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 29, 1997
INTERFACE, CONSOLIDATION
NON- 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: $ 17,731 $ 4,135 $ (1,863) $ - $ 20,003
-------- -------- -------- ------- --------
Cash flows from investing activities:
Purchase of plant and equipment (17,937) (2,261) (1,840) - (22,038)
Acquisitions, net of cash acquired - - (14,698) - (14,698)
Other - - (4,366) - (4,366)
-------- -------- -------- ------- --------
Net cash provided by (used in) (17,937) (2,261) (20,904) - (41,102)
investing activities -------- -------- -------- ------- --------
Cash flows from financing activities:
Net borrowings (repayments) 944 (738) 15,880 - 16,086
Proceeds from issuance of common - - 9,458 - 9,458
stock
Cash dividends paid - - (3,061) - (3,061)
Other - - - - -
-------- -------- -------- ------- --------
Net cash provided by (used in) financing 944 (738) 22,277 - 22,483
activities -------- -------- -------- ------- --------
Effect of exchange rate change on cash - (330) - - (330)
-------- -------- -------- ------- --------
Net increase (decrease) in cash 738 806 (490) - 1,054
Cash at beginning of year 3,481 4,791 490 - 8,762
-------- -------- -------- ------- --------
Cash at end of year $ 4,219 $ 5,597 $ - $ - $ 9,816
======== ======== ======== ======= ========
</TABLE>
10<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. For the three month and six month
periods ended June 29, 1997, the Company's net sales increased
$34.3 million (14.4%) and $86.6 million (19.6%), respectively,
compared with the same periods in 1996. These increases were
primarily attributable to increased sales volume in (i) the
Company's floorcoverings operations (associated in part with the
acquisitions of the floorcovering contractors in the Company s
Re:Source Americas network), (ii) the Company's specialty
products division resulting in part from the sale of specialty
products through the Re:Source Americas network, and (iii) the
Company's interior fabrics operations due to increased foreign
demand for its products. These increases were somewhat offset by
the weakening of certain key currencies (particularly the 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 67.1% and 67.4%, respectively, for the three month and six
month periods ended June 29, 1997, when compared to 68.5% and
68.8% for the same periods in 1996. The decrease is primarily
attributable to manufacturing efficiencies resulting from the
Company's "war on waste" initiative and the new manufacturing
facilities in its floorcoverings and interior fabrics operations.
Also, the Company's mass customization production strategy
continues to result in a shift to higher margin products. These
improved margin levels continue to be somewhat mitigated by the
acquisition of the floorcovering contractors comprising the
Re:Source Americas network, which historically had higher cost of
sales ratios than the Company.
Selling, general and administrative expenses, as a
percentage of sales, increased slightly to 24.6% and 24.5%,
respectively, for the three month and six month periods ended
June 29, 1997, when compared to 23.4% and 23.7% during the same
periods in 1996. The increase is attributable to (i)
administrative expenses associated with building an
infrastructure to manage the Re:Source Americas network, and
(ii) increased marketing and sampling expenses in the Company s
floorcovering operations associated with the introduction of new
products as the Company continues to implement a mass
customization strategy in both its U.S. and its European and
Asia-Pacific operations.
For the three month and six month periods ended June 29,
1997, the Company's other expense increased $.6 million and $2.6
million, respectively, compared to the same periods in 1996,
primarily due to an increase in bank debt incurred as a result of
the Company's acquisitions, as well as an increase in interest rates.
As a result of the aforementioned factors, the Company's net
income increased 42% to $7.9 million and 61% to $14.3 million,
respectively, for the three month and six month periods ended
June 29, 1997, compared to the same periods in 1996.
LIQUIDITY AND CAPITAL RESOURCES. The primary uses of cash
during the six month period ended June 29, 1997 have been (i) $22
million for additions to property and equipment in the Company's
manufacturing facilities, (ii) $14.7 million associated with
acquisitions, and (iii) $4.4 million related to various deposits
and other long-term assets. These uses were funded primarily by
$20 million from operating activities, $16 million from long-
term financing, and $9.5 million from the issuance of common
stock.
Cash provided by operating activities decreased to $20
million during the six month period ended June 29, 1997 from
$23.3 million during the corresponding period in the prior year.
This decrease was caused primarily by a decrease in accounts
payable and accrued expenses and an increase in inventories.
This decrease was somewhat offset by an increase in net income.
The Company, as of June 29, 1997, recognized a $15.5
million decrease in foreign currency translation adjustment
compared to that of December 29, 1996. 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 June 29, 1997, the Company had approximately $40
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 June 29, 1997, 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.
11<PAGE>
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. In June, 1997, the Company amended its
senior bank credit facilities to obtain a $50,000,000 net
increase in such facilities.
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 SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of shareholders on May 20, 1997.
(b) Not applicable.
(c) The matters considered at the annual meeting, and the votes
cast for, against or withheld, as well as the number of
abstentions, relating to each matter, are as follows:
(i) Election of the following directors:
<TABLE>
<CAPTION>
Class A For Withheld
------- --- --------
<S> <C> <C>
Dianne Dillon-Ridgley 21,008,640 130,095
Carl I. Gable 21,008,290 130,445
Dr. June M. Henton 21,011,790 126,945
J. Smith Lanier, II 21,008,490 130,245
Leonard G. Saulter 21,010,248 128,487
Clarinus C.Th. van Andel 21,011,290 127,445
Class B For Withheld
------- --- --------
Ray C. Anderson 2,408,832 0
Brian L. DeMoura 2,408,832 0
Charles R. Eitel 2,408,832 0
Daniel T. Hendrix 2,408,832 0
Don E. Russell 2,408,832 0
John H. Walker 2,408,832 0
Gordon D. Whitener 2,408,832 0
</TABLE>
12
<PAGE>
(ii) Proposal to adopt the Company's Omnibus Stock Incentive Plan:
For: 18,124,699
Against: 4,773,290
Abstain: 313,837
(d) Not applicable.
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
------- ----------------------
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 Employment Agreement of Ray C. Anderson dated April 1, 1997
10.2 Change of Control Agreement of Ray C. Anderson dated April 1, 1997
10.3 Employment Agreement of Charles R. Eitel dated April 1, 1997
10.4 Change of Control Agreement of Charles R. Eitel dated April 1,
1997
10.5 Employment Agreement of Brian L. DeMoura dated April 1, 1997
10.6 Change of Control Agreement of Brian L. DeMoura dated April 1,1997
13<PAGE>
10.7 Employment Agreement of Daniel T. Hendrix dated April 1, 1997
10.8 Change of Control Agreement of Daniel T. Hendrix dated
April 1, 1997
10.9 Employment Agreement of Gordon D. Whitener dated April 1, 1997
10.10 Change of Control Agreement of Gordon D. Whitener dated April 1,
1997
10.11 Employment Agreement of Raymond S. Willoch dated April 1, 1997
10.12 Change of Control Agreement of Raymond S. Willoch dated April 1,
1997
10.13 Employment Agreement of Jeffrey A. Goldberg dated April 1, 1997
10.14 Change of Control Agreement of Jeffrey A. Goldberg dated April 1,
1997
10.15 Employment Agreement of Alan S. Kabus dated April 1, 1997
10.16 Change of Control Agreement of Alan S. Kabus dated April 1, 1997
10.17 Employment Agreement of Joyce D. LaValle dated April 1, 1997
10.18 Change of Control Agreement of Joyce D. LaValle dated April 1,
1997
10.19 Employment Agreement of John H. Walker dated April 1, 1997
10.20 Change of Control Agreement of John H. Walker dated April 1, 1997
10.21 Employment Agreement of John L. Partridge dated April 1, 1997
10.22 Change of Control Agreement of John L. Partridge dated April 1,
1997
10.23 Employment Agreement of John R. Wells dated April 1, 1997
10.24 Change of Control Agreement of John R. Wells dated April 1, 1997
10.25 Employment Agreement of Michael D. Bertolucci dated April 1, 1997
10.26 Change of Control Agreement of Michael D. Bertolucci dated
April 1, 1997
10.27 Second Amended and Restated Credit Agreement, dated as of June 25,
1997, among the Company (and certain direct and indirect
subsidiaries), the lenders listed therein, SunTrust Bank, Atlanta
and The First National Bank of Chicago
10.28 Term Loan Agreement, dated as of June 25, 1997, among the Company
(and certain direct and indirect subsidiaries), the lenders
listed therein, SunTrust Bank, Atlanta and The First National
Bank of Chicago
27.1 Financial Data Schedule (for SEC use only).
(b) No reports on Form 8-K were filed during the quarter ended June 29, 1997.
14<PAGE>
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: August 12, 1997 By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Senior Vice President
(Principal Financial Officer)
15<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
<C> <S>
10.1 Employment Agreement of Ray C. Anderson dated April 1, 1997
10.2 Change of Control Agreement of Ray C. Anderson dated April 1, 1997
10.3 Employment Agreement of Charles R. Eitel dated April 1, 1997
10.4 Change of Control Agreement of Charles R. Eitel dated April 1, 1997
10.5 Employment Agreement of Brian L. DeMoura dated April 1, 1997
10.6 Change of Control Agreement of Brian L. DeMoura dated April 1, 1997
10.7 Employment Agreement of Daniel T. Hendrix dated April 1, 1997
10.8 Change of Control Agreement of Daniel T. Hendrix dated April 1, 1997
10.9 Employment Agreement of Gordon D. Whitener dated April 1, 1997
10.10 Change of Control Agreement of Gordon D. Whitener dated April 1, 1997
10.11 Employment Agreement of Raymond S. Willoch dated April 1, 1997
10.12 Change of Control Agreement of Raymond S. Willoch dated April 1, 1997
10.13 Employment Agreement of Jeffrey A. Goldberg dated April 1, 1997
10.14 Change of Control Agreement of Jeffrey A. Goldberg dated April 1, 1997
10.15 Employment Agreement of Alan S. Kabus dated April 1, 1997
10.16 Change of Control Agreement of Alan S. Kabus dated April 1, 1997
10.17 Employment Agreement of Joyce D. LaValle dated April 1, 1997
10.18 Change of Control Agreement of Joyce D. LaValle dated April 1, 1997
10.19 Employment Agreement of John H. Walker dated April 1, 1997
10.20 Change of Control Agreement of John H. Walker dated April 1, 1997
10.21 Employment Agreement of John L. Partridge dated April 1, 1997
10.22 Change of Control Agreement of John L. Partridge dated April 1, 1997
10.23 Employment Agreement of John R. Wells dated April 1, 1997
10.24 Change of Control Agreement of John R. Wells dated April 1, 1997
10.25 Employment Agreement of Michael D. Bertolucci dated April 1, 1997
10.26 Change of Control Agreement of Michael D. Bertolucci dated April 1, 1997
10.27 Second Amended and Restated Credit Agreement, dated as of June 25, 1997
among the Company (and certain direct and indirect subsidiaries), the lenders
listed therein, SunTrust Bank, Atlanta and The First National Bank of Chicago
10.28 Term Loan Agreement, dated as of June 25, 1997, among the Company (and certain
direct and indirect subsidiaries), the lenders listed therein, SunTrust Bank,
Atlanta and The First National Bank of Chicago
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
16
<PAGE>
Exhbit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between
INTERFACE, INC., a corporation organized under the laws of the
State of Georgia, U.S.A. (the "Company"), and RAY C. ANDERSON, a
resident of Atlanta, Georgia ("Executive").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an employment
agreement, effective as of August 1, 1995, setting forth the
terms of Executive's employment with the Company (the "Prior
Agreement");
WHEREAS, the parties desire to continue the employment
arrangement and to modify the Prior Agreement in certain
respects; and
WHEREAS, the terms of this Agreement, which continues,
amends and restates the Prior Agreement in its entirety, reflect
the modified terms of employment which the parties desire to have
govern their employment relationship commencing on the date
hereof.
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, and for 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 its
Chairman and Chief Executive Officer, 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 Board
of Directors of the Company; Executive hereby accepts such
employment and agrees to perform such executive duties as may be
assigned to Executive. Executive may be relocated, Executive's
titles and duties may be changed, and Executive may be promoted
to a higher position within the Company, but Executive 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 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
enterprise 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 NationsBank Corporation
and Royal Ten Cate (USA), Inc.) 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, Executive may invest in no more than
one percent of the outstanding stock or securities of any
competitor, the stock or securities of which are traded on a
national stock exchange of any country.
<PAGE>
4. Term. The duration of this Agreement (the "term")
shall be for a rolling, two-year term commencing on the date
hereof, and shall be deemed automatically (without further action
by either the Company or Executive) to extend each day for an
additional day such that the remaining term of the Agreement
shall continue to be two 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 years; and, provided further, the Company
may, by notice to Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the term of this
Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company
may be terminated as follows:
(a) Voluntary Termination. Executive may voluntarily
terminate his employment hereunder at any time, effective 90 days
after delivery to the Company of Executive's signed, written
resignation; the Company may accept said resignation and pay
Executive in lieu of waiting for passage of the notice period.
(b) Termination by Company. Subject to the terms of
Sections 5(c) and (d) below, the Company may terminate
Executive's employment hereunder, in its sole discretion, whether
with or without "just cause", at any time upon written notice to
Executive.
(c) Termination Without Just Cause. If, prior to the end
of the term of this Agreement, the Company terminates Executive's
employment without "just cause" (as defined in subsection (d)
below), Executive shall be entitled to receive, as damages
payable as a result of, and arising from, the Company's breach of
this Agreement, the compensation and benefits set forth in
clauses (i) through (vi) below. The time periods for which
compensation and benefits will be provided with respect to (i)
through (iv) below is referred to herein as the "Continuation
Period", which means the time period remaining from the date of
Executive's termination of employment to the end of the remaining
term of this Agreement as provided in Section 4 above. Except to
the extent provided in clause (x) hereof, Executive shall have no
duty to mitigate any of the damages payable hereunder. The fact
that Executive is eligible for retirement, including early
retirement, under applicable retirement plans or his Salary
Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes)
for the Continuation Period in the same manner as it was being
paid as of the date of termination. For purposes hereof,
Executive's "current salary" shall be the highest rate in effect
during the six-month period prior to Executive's termination.
(ii) Bonuses and Incentives. Executive shall
receive bonus payments from the Company for the Continuation
Period in an amount for each calendar month during such period
equal to one-twelfth of the average of the bonuses paid to
Executive for the two calendar years immediately preceding the
year in which such termination occurs ("Average Bonus").
Executive shall also receive a prorated bonus for the year in
2<PAGE>
which such termination occurs equal to the Average Bonus
multiplied by the number of days Executive worked in such year
divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that
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, however, 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) Health and Life Insurance Coverages. The
health and life insurance benefit coverages (including any
executive medical and/or life insurance plans) provided to
Executive at Executive's date of termination shall be continued
for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment
had not terminated (subject to the customary changes in such
coverages upon Executive's retirement, reaching age 65 or similar
events). Any additional coverages Executive had at termination,
including dependent coverage, will also be continued for the
Continuation Period on the same terms, to the extent permitted by
the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be
paid by Executive by separate check payable to the Company each
month in advance (or in such other manner as the Company may
agree). If the terms of any benefit plan referred to in this
subsection do not permit continued participation by Executive,
then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided
for in this subsection shall be applied against and reduce the
period for which COBRA benefits will be provided. If Executive
is covered by a split-dollar or similar life insurance program as
of the date of termination, Executive shall have the option in
Executive's sole discretion to have such policy transferred to
Executive upon termination, provided that, except as may
otherwise be provided in a separate agreement, the Company is
paid for its interest (i.e., the cash surrender value) in the
policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law
and the provisions of the applicable plan permit continued
participation, 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 Executive's date of termination, including, to the extent such
plans are still maintained by the Company, the Interface Flooring
Systems, Inc. Retirement Plan and Trust, and the Interface, Inc.
Savings and Investment Plan (the "Savings Plan"). Executive's
participation in such retirement plans shall continue for the
Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of
the plans), and the compensation payable to Executive under
subsections (c)(i) and (ii) above shall be treated (unless
otherwise excluded under the terms of such retirement plans) as
compensation when computing benefits under the plans. For
purposes of the Savings Plan, 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. To the extent permissible under
applicable law, Executive shall also be considered fully vested
under such plans. If continued participation in any plan is not
3<PAGE>
permitted or if Executive's benefits are not fully vested, the
Company shall pay to Executive and, if applicable, Executive's
beneficiary, a supplemental benefit equal to the present value on
the date of termination of employment (calculated as provided in
each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be
covered for the Continuation Period (less any amounts Executive
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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of
termination, all outstanding stock options granted to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the
provisions of this clause (v) shall constitute an amendment of
Executive's stock option agreements under such stock plans. In
addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc.
Omnibus Stock Incentive Plan, restrictions on all shares of
restricted stock (and other performance shares, performance units
or deferred shares) awarded to Executive (if any) under said plan
shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and
after Executive's date of termination, Executive shall continue
to be covered by, and entitled to the benefits provided under,
Executive's Salary Continuation Agreement with the Company,
payable in accordance with the terms of said agreement. If
Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the
Company without "Cause" as described in the Salary Continuation
Agreement.
(vii) Cessation Upon Death. The continuation
benefits payable or to be provided under clauses (i), (ii), (iii)
and (iv) of this Section 5(c) shall cease in the event of
Executive's death. (The foregoing shall not operate or be
construed to negate the benefits payable to Executive and
Executive's estate under the plans and policies referenced in
clauses (iii) and (iv) in the event of Executive's death during
the Continuation Period.)
(viii) Additional Consideration. To be entitled to
receive the foregoing compensation, Executive shall sign whatever
additional release of claims, confidentiality agreements and
other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance
shall not require Executive to be active in the Company's day-to-
day activities or engage in any substantial travel, and Executive
shall be reimbursed for all reasonable and necessary out-of-
pocket business expenses incurred in providing such assistance.
4<PAGE>
(ix) Effect of Other Termination Events. If
Executive voluntarily resigns from employment or is terminated
for just cause prior to the end of the term of this Agreement,
then Executive shall be entitled to no payment or compensation
whatsoever from the Company under this Agreement, other than as
may be due Executive through Executive's last day of employment.
If Executive's employment is terminated due to Executive's
disability or death (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 plans or, in the case of
death, its life insurance payment policy in effect for executives
of Executive's level or pursuant to the terms of any separate
agreement concerning split-dollar or similar life insurance;
provided, however, Executive or Executive's estate, as the case
may be, shall not by operation of this provision forfeit any
rights in which Executive is vested at the time of Executive's
disability or death (including, without limitation, the rights
and benefits provided under applicable retirement plans and
Executive's Salary Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled
to compensation and benefits under this Section 5(c) and such
payments would be considered to be severance payments contingent
upon a change in control under Internal Revenue Code Section
280G, Executive shall be required to offer to perform the duties
and job Executive 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 under Code Section 280G) by
reducing the amount of such severance payments Executive is
entitled to receive by any compensation and benefits Executive
earns from subsequent employment (but Executive shall not be
required to seek such employment) during the Continuation Period.
If the compensation and benefits payable to Executive under this
Section 5(c) are reduced by mitigation, Executive shall continue
to be entitled to receive in the aggregate under this Agreement
and the Change in Control Agreement between Executive and Company
of even date herewith, an amount of compensation and benefits at
least equal to 2.99 times Executive's "Base Amount" as defined in
Internal Revenue Code Section 280G. In the event Executive's
employment is terminated without "just cause" within 24 months
following the date of a "Change in Control" (as defined in the
Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in
Control, the amounts payable to Executive under clauses (i) and
(ii) above shall be paid in single lump sum payments determined
in the same manner as provided in Sections 4(c)(i) and (ii) of
the Change in Control Agreement.
(d) Just Cause. 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 "just cause" shall mean: (i)
Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company
(including its subsidiaries and affiliated companies), (ii)
Executive's refusal or repeated failure to follow the established
lawful policies of the Company applicable to persons occupying
the same or similar positions, (iii) Executive's material breach
of this Agreement, or (iv) Executive's conviction of a felony or
other crime involving moral turpitude. A termination of
5<PAGE>
Executive for just cause based on clause (i), (ii) or (iii) of
the preceding sentence shall take effect 30 days after Executive
receives from the Company written notice of intent to terminate
and the Company's description of the alleged cause, unless
Executive shall, during such 30-day period, remedy the events or
circumstances constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7
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's salary, current perquisites
(including, but not limited to, car allowance) and bonus
opportunity (currently expressed as a percentage of Executive's
base salary) may be increased from time to time as determined by
the Board of Directors (or Committee of the Board), but shall not
be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to
vacation with pay, life insurance, health insurance and such
other employee benefits as Executive may be entitled to receive
in accordance with the established plans and policies of the
Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following
terms shall have the meanings ascribed to such terms as set forth
below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the
world.
(ii) "Confidential Information" - information
relating to Company's customers, operations, finances, and
business in any form that derives value from not being generally
known to other persons or entities, including, but not limited
to, technical or nontechnical data, formulas, patterns (including
future carpet and fabric patterns), customer purchasing practices
and preferences, compilations (including compilations of customer
information), programs (including computer programs and models),
6<PAGE>
devices (including carpet and fabric manufacturing equipment),
methods (including aesthetic and functional design and
manufacturing methods), techniques (including style and design
technology and plans), drawings (including product or equipment
drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or
lists of actual or potential customers or suppliers (including
identifying information about those customers), whether or not
reduced to writing. Confidential Information subject to this
Agreement may include information that is not a trade secret
under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under
this Agreement for only a two year period after the expiration of
this Agreement or termination of Executive's employment.
(iii) "Customers" - customers of Company that
Executive, during the two year period before the expiration of
this Agreement or termination of Executive's employment,
(A) solicited or serviced or (B) about whom Executive had
Confidential Information. The parties acknowledge that a two-
year period for defining Customers (as well as "Suppliers",
below) is reasonable based on Company's typical sales cycle,
budgetary requirements and procurement procedures.
(iv) "Products" - (A) broadloom carpet, carpet tile,
and broadloom carpet in six-foot and competitive widths, (B)
specialty interior fabrics (wall, panel, window and upholstery),
and (C) specialty chemicals and interior architectural products
(including raised/access floors) for contract, commercial and
institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide
as a Company executive and that Executive shall be prohibited
from providing in competition with Company in accordance with the
terms of this Agreement, which are to manage and supervise, and
to have responsibility for, the conduct of the business of
designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and
reclaiming, for contract, commercial and institutional markets
and customers (i.e., all markets other than residential), (A)
broadloom carpet, carpet tile, and broadloom carpet in six-foot
and competitive widths, (B) specialty interior fabrics (wall,
panel, window and upholstery), and (C) specialty chemicals and
interior architectural products (including raised/access floors);
without limiting the foregoing, Executive shall be responsible
for: (1) development of overall business strategy, (2) planning
for expansion of the business, including expansion through
mergers, acquisitions, joint ventures and other combinations and
affiliations, (3) providing supervision and oversight of the
principal executives in charge of various components of the
business, (4) developing and leading efforts to enhance and
improve the environmental sustainability of the foregoing
products and of the manufacturing operations and processes
utilized with respect to such products, and (5) serving as the
representative and spokesman for the business with its various
constituencies, including employees, customers, suppliers,
shareholders and the investment community. Executive
acknowledges that he has been informed of and had an opportunity
to discuss with Company the specific activities Executive will
perform as Services, and that Executive understands the scope of
the activities constituting Services.
7<PAGE>
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this
Agreement or termination of Executive's employment, (A) had
contact with on behalf of Company or (B) about whom Executive had
Confidential Information.
(vii) "Territory" - North America, which is the
geographic area where Executive performs Services for Company and
in which Company continues to conduct business. Executive has
been informed of and had an opportunity to discuss with Company
the specific territory in which Executive will perform Services.
Executive acknowledges that the market for Company Products is
worldwide, and that the Territory is the area in which
Executive's provision of Services in violation of this Agreement
would cause harm to Company.
(b) Non-disclosure and Restricted Use. Executive shall use
best efforts to protect Confidential Information. Furthermore,
Executive will not use, except in connection with work for
Company, and will not disclose during or after Executive's
employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this
Agreement or termination for any reason of Executive's
employment, or at any time upon Company's request, Executive will
deliver promptly to Company all materials, documents, plans,
records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business,
which at all times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and
for two years after the termination for any reason of Executive's
employment, Executive will not solicit Customers for the purpose
of providing or selling any Products.
(e) Non-solicitation of Suppliers. During employment and
for two years after the termination for any reason of Executive's
employment, Executive will not solicit any Supplier for the
purpose of obtaining goods or services that Company obtained from
that Supplier and that are used in or relate to any Products.
(f) Non-solicitation of Company Employees. During
employment and for two years after the termination for any reason
of Executive's employment, Executive will not solicit for
employment with another person or entity, anyone who is, or was
at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason
of Executive's employment, Executive will not provide any
Services within the Territory to any person or entity developing,
manufacturing, marketing, selling, distributing or installing any
Products.
(h) Disparagement. Executive shall not at any time make
false or misleading statements about Company, including its
products, management, employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before,
and for two years after, the termination for any reason of
Executive's employment, Executive shall, before accepting
8<PAGE>
employment with another employer, provide such prospective
employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such
employer's name and a description of the services Executive will
provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to
documents, programs, and other expressions in any tangible medium
(collectively, "Works") are within the scope of Executive's
employment and part of Executive's duties and responsibilities.
Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and
under the overall direction of, Company, and are and at all times
shall be regarded, together with the Works, as "work made for
hire" as that term is used in the United States Copyright Laws.
Without limiting this acknowledgment, Executive assigns, grants,
and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions,
including all copyrights and renewals. Executive will execute
and deliver to Company, its successors and assigns, any
assignments and documents Company requests for the purpose of
establishing, evidencing, and enforcing or defending its
complete, exclusive, perpetual and worldwide ownership of all
rights, titles and interests of every kind and nature, including
all copyrights, in and to the Works, and Executive constitutes
and appoints Company as Executive's agent to execute and deliver
any assignments or documents Executive fails or refuses promptly
to execute and deliver, this power and agency being coupled with
an interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall
disclose promptly to Company (which shall receive it in
confidence), and only to Company, any invention or idea of
Executive (developed alone or with others) conceived or made
during Executive's employment by Company or within six months of
the date of expiration of this Agreement or termination of
employment. Executive assigns to Company any such invention or
idea in any way connected with Executive's employment with
Company or related to Company's business, research or
development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed
necessary by Company to enable it to obtain, maintain, protect
and defend patents covering such inventions and ideas and to
confirm Company's exclusive ownership of all rights in such
inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any
assignments or documents Executive fails or refuses to execute
and deliver promptly, this power and agency being coupled with an
interest and being irrevocable. This constitutes Company's
written notification that this assignment does not apply to an
invention for which no equipment, supplies, facility or trade
secret information of Company was used and which was developed
entirely on Executive's own time, unless (i) the invention
relates (A) directly to the business of Company, or (B) to
Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work
performed by Executive for Company.
9<PAGE>
8. Injunctive Relief. Executive acknowledges that any
breach of the terms of Section 7 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 the Company.
9. 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 exclusive jurisdiction of the
Superior Court of Cobb County, Georgia and the U.S. District
Court in Atlanta, Georgia and hereby waives any objection
Executive might otherwise have to jurisdiction and venue in such
courts in the event either court is requested to resolve a
dispute between the parties.
10. 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 (i) upon actual receipt
if delivered in person or by facsimile transmission, (ii) upon
the earlier of actual receipt or the expiration of two business
days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the
expiration of seven days after mailing if sent by registered or
certified express mail, 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.: 770-437-6822
Attn: Board of Directors
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Ray C. Anderson
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a
current address. Either party may change its address (and
facsimile number) for purposes of notices under this Agreement by
providing notice to the other party in the manner set forth
above.
11. 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.
10<PAGE>
12. 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 all
or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific reference to
this Agreement.
14. Severability. The Company's various rights and
remedies referenced in this Agreement are cumulative and
nonexclusive of one another, and Executive's covenants and
agreements contained herein are severable and independent of one
another. The existence of any claim by Executive against the
Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to enforcement by the Company of any or
all of 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 continue
in full force and effect.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its duly authorized officers, and
Executive has hereunder set his hand, as of the date first above
written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
Raymond S. Willoch,
Secretary
EXECUTIVE:
/s/ Ray C. Anderson
Ray C. Anderson
<PAGE>
EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and entered
into as of the 1st day of April, 1997, by and between INTERFACE, INC., a Georgia
corporation (the "Company"), and RAY C. ANDERSON, a resident of Atlanta, Georgia
("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 (as defined in Section 3(c) below) of the Company, and to induce its key
employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of August 1, 1995, regarding Executive's circumstances
following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the Prior
Agreement in its entirety, reflects the modified terms which the parties desire
to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the "term")
shall be for a rolling, two-year term commencing on the date hereof, and shall
be deemed automatically (without further action by either the Company or
Executive) to extend each day for an additional day such that
<PAGE>
the remaining term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive, cause
this Agreement to cease to extend automatically and, upon such notice, the term
of this Agreement shall be two years following such notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other crime
involving moral turpitude. A termination of Executive for Cause based on clause
(i) of the preceding sentence shall take effect 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 (ii) above shall take effect
immediately upon the Company's delivery of the termination notice.
(c) Change in Control. The term "Change in Control" as used herein
shall mean and be deemed to occur on the earliest of, and upon any subsequent
occurrence of, the following:
(i) during such period as the holders of the Company's Class B
common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer of
all or substantially all of the property or assets of the Company other than to
an entity of which the
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Company owns at least 70 percent of the Voting Stock, or (C) a plan of complete
liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent Board
of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company then
in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a continuous
period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean the
individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect), provided
that, for purposes of this definition, the reference to each such individual
shall be deemed to include the members of such individual's immediate family,
such individual's estate, and any trusts created by such individual for the
benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with any other
incentive stock plans adopted by the Company during the term of this Agreement.
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<PAGE>
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company-required involuntary
relocation of Executive's place of residence or a significant increase in
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,
Executive's Disability, a voluntary election of Executive to retire (including
early retirement) within the meaning of applicable retirement plans, or
Executive's death; provided, however, the fact that Executive is eligible for
retirement (including early retirement) under applicable retirement plans or
Executive's Salary Continuation Agreement (see subsection (c)(vi) below) at the
time of Executive's termination due to the reasons in (A), (B) or (C) of this
subsection (b)(ii) shall not make Executive ineligible to receive benefits under
this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to receive
upon Executive's termination the compensation and benefits (but only to the
extent Executive actually receives such compensation and benefits)
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<PAGE>
described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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, further,
after taking into consideration any such reductions, Executive shall continue to
be entitled to receive in the aggregate under this Agreement and the employment
agreement an amount of compensation and benefits at least equal to 2.99 times
Executive's "Base Amount" as defined in Code Section 280G, and any amounts paid
under paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the
manner provided in such paragraphs.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment; and,
provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive bonus
payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to
one-twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the customary
changes in such coverages upon Executive's retirement or reaching age 65),
beginning on the date of such termination and ending on the date 24 months from
the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such
5
<PAGE>
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection (c)(iii) do not permit continued participation by
Executive, the Company will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this subsection
shall be applied against and reduce the period for which COBRA benefits will be
provided. If Executive is covered by a split-dollar or similar life insurance
program at the date of termination, Executive shall have the option in
Executive's sole discretion to have such policy transferred to Executive upon
termination, provided that, except as may otherwise be provided in a separate
agreement, the Company is paid for its interest (i.e., the cash surrender value)
in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc. Retirement
Plan and Trust, and the Interface, Inc. Savings Investment Plan and Trust (the
"Savings Plan"). Executive's participation in such retirement plans shall
continue for a period of 24 months from the date of termination of Executive's
employment (at which point Executive will be considered to have terminated
employment within the meaning of the plans), and the compensation payable to
Executive under subsections (c)(i) and (c)(ii) of this Section 4 shall be
treated (unless otherwise excluded under the terms of such retirement plans) as
compensation when computing benefits under such plans. For purposes of the
Savings Plan, 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. To the extent permissible under
applicable law, 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 Executive and, if
applicable, Executive's beneficiary, a supplemental benefit equal to the present
value on the date of termination of employment (calculated as provided in each
plan) of the excess of (A) the benefit Executive would have been paid under such
plan if Executive had continued to be covered for the 24-month period (less any
amounts Executive 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 within 30 days of the
date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive,
if any, under the Interface, Inc. Omnibus Stock Incentive Plan (or any other
Stock Plan) shall lapse, and such shares and awards shall become 100% vested. To
the extent inconsistent with this immediate vesting requirement, the provisions
of this paragraph (v) shall constitute an amendment of the restricted stock
agreements issued under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement. If Executive
is entitled to benefits under this Section 4(c), he will be treated as having
his
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<PAGE>
employment terminated by the Company without "Cause" as described in the Salary
Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment under
subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the amounts
Executive is entitled to receive under the benefit plans and arrangements
described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with the
terms of such agreements, and Executive shall be considered for purposes of all
such restricted stock agreements as continuing to be actively employed by the
Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants or
counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to be
provided, to Executive by the Company or any member of its affiliated group (the
Company and all members of its affiliated group being hereinafter collectively
referred to as the "Controlled Group") under this Agreement, any other agreement
between Executive and any member of the Controlled Group, or any plan or policy
of any member of the Controlled Group, are to be treated as Excess Severance
Payments subject in whole or in part to the excise tax imposed under Code
Section 4999 (the "Excise Tax"), then the Company shall direct Tax Counsel to
determine and compare Executive's net after-tax income under each of the
following assumptions: (i) all of the compensation and benefits payable by the
Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
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(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate fully
with Tax Counsel and provide Tax Counsel with all compensation and benefit
amounts, personal tax information and other information necessary or helpful in
calculating such net after-tax amounts. If Executive disputes Tax Counsel's
calculations, the dispute shall be resolved in accordance with Section 6(f)
below. 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) to achieve this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the Excise
Tax, then the parties shall make the applicable correction that will achieve the
goal described in Section 5(c) hereof. In the event the error referred to in
clause (i) hereof occurs, Executive shall repay to the Company, within 10 days
after the error is discovered, the amount necessary to avoid the Excise Tax;
provided, however, that if Executive, based on advice from Tax Counsel and
Executive's own tax advisor, determines that the return of such amounts will not
serve to eliminate the Excess Severance Payments and the Excise Tax, the Company
then shall be obligated to pay to Executive, within 10 days after Executive
notifies the Company of Executive's determination, the total amount by which the
original amount of Executive's compensation and benefits were reduced pursuant
to the terms of Sections 5(a) and (b) hereof. In the event the error referred to
in clause (ii) hereof occurs, the Company shall pay to Executive, within 10 days
after the error is discovered, the maximum amount of the compensation and
benefits that were reduced pursuant to the terms of Sections 5(a) and (b) hereof
that Executive may receive without triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal Express),
and (iii) upon the earlier of actual receipt or the expiration of seven days
after mailing if sent by registered or certified express mail, postage prepaid,
to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Board of Directors
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Ray C. Anderson
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current address.
Either party may change its address (and facsimile number) for purposes of
notices under this Agreement by providing notice to the other party in the
manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the unsecured
obligation of the Company (and its successor), except to the extent (i) the
terms of any other agreement, plan or arrangement pertaining to the parties
provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects
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in whole or in part to fund the Company's obligations under this Agreement
pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however,
that the fee for the arbitrator(s) shall be shared equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Charles R. Eitel
-----------------------------------
Charles R. Eitel, President and
Chief Operating Officer
Attest: /s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Ray C. Anderson
------------------------------------
Ray C. Anderson
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
CHARLES R. EITEL, a resident of Atlanta, Georgia ("Executive").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an employment agreement,
effective as of November 9, 1993, setting forth the terms of Executive's
employment with the Company (the "Prior Agreement");
WHEREAS, the parties desire to continue the employment arrangement and
to modify the Prior Agreement in certain respects; and
WHEREAS, the terms of this Agreement, which continues, amends and
restates the Prior Agreement in its entirety, reflect the modified terms of
employment which the parties desire to have govern their employment
relationship commencing on the date hereof.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 President and Chief
Operating Officer of the Company, and shall perform such duties and functions
for the Company and its subsidiaries and affiliates as shall be specified from
time to time by the Chief Executive Officer ("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 Executive. Executive may be
relocated, Executive's titles and duties may be changed, and Executive may be
promoted to a higher position within the Company, but Executive 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 enterprise 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 Weeks Corporation and Ladd Furniture,
Inc.) without the prior written approval of
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the Company. In addition, under no circumstances will Executive have any
financial interest in any competitor of the Company; provided, however,
Executive may invest in no more than one percent of the outstanding stock or
securities of any competitor, the stock or securities of which are traded on a
national stock exchange of any country.
4. Term. The duration of this Agreement (the "term") shall be
for an initial term of five years; provided, from and after the third
anniversary of the date hereof, the term shall be converted to a rolling,
two-year term (commencing on the third anniversary of the date hereof), and
shall be deemed automatically (without further action by either the Company or
Executive) to extend each day for an additional day such that the remaining
term of the Agreement from and after the third anniversary shall continue to be
two 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 years; and, provided further, the Company may, by
notice to Executive at any time after the third anniversary of the date hereof,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (vi) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (x) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans or
his Salary Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to receive benefits
under this Section 5(c).
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that 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,
however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the
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compensation payable to Executive under subsections (c)(i) and (ii) above shall
be treated (unless otherwise excluded under the terms of such retirement plans)
as compensation when computing benefits under the plans. For purposes of the
Savings Plan, 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. To the extent permissible under
applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement with the Company, payable in accordance with the terms of said
agreement. If Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the Company without
"Cause" as described in the Salary Continuation Agreement.
(vii) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(viii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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
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fully with and devote Executive's reasonable best efforts to providing
assistance requested by the Company. Such assistance shall not require
Executive to be active in the Company's day-to-day activities or engage in any
substantial travel, and Executive shall be reimbursed for all reasonable and
necessary out-of-pocket business expenses incurred in providing such
assistance.
(ix) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans and Executive's Salary
Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the
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established lawful policies of the Company applicable to persons occupying the
same or similar positions, (iii) Executive's material breach of this Agreement,
or (iv) Executive's conviction of a felony or other crime involving moral
turpitude. A termination of Executive for just cause based on clause (i), (ii)
or (iii) of the preceding sentence shall take effect 30 days after Executive
receives from the Company written notice of intent to terminate and the
Company's description of the alleged cause, unless Executive shall, during such
30-day period, remedy the events or circumstances constituting just cause;
provided, however, 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).
(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, car allowance) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the CEO or Board of Directors (or Committee of
the Board), but shall not be reduced or eliminated. With regard to the bonus
program in effect for senior executives generally, the maximum achievement
factor that Executive may accomplish with regard to the financial and
non-financial objectives under such bonus program shall be 125%, rather than
110%.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time. In addition, the
Company shall provide Executive with a split- dollar insurance policy (death
benefit of $3 million), governed under the terms of a separate agreement
related to such policy. The Company also shall afford Executive the
opportunity, in each of the initial five years that this Agreement is in
effect, to earn an extraordinary bonus of up to $300,000 per annum if certain
performance criteria and targets are achieved (such criteria and targets to be
mutually agreed in writing by the Company and Executive).
(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.
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7. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - (A) broadloom carpet, carpet tile, and
broadloom carpet in six-foot and competitive widths, (B) specialty interior
fabrics (wall, panel, window and upholstery), and (C) specialty chemicals and
interior architectural products (including raised/access floors) for contract,
commercial and institutional markets and customers (i.e., all markets other
than residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and reclaiming, for
contract, commercial and institutional markets and customers (i.e., all markets
other than residential), (A) broadloom carpet, carpet tile, and broadloom
carpet in six-foot and competitive widths, (B) specialty interior fabrics
(wall, panel, window and upholstery), and (C) specialty chemicals and interior
architectural products (including raised/access floors); without limiting the
foregoing, Executive shall be responsible for:
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(1) development of overall business strategy, (2) planning for expansion of the
business, including expansion through mergers, acquisitions, joint ventures and
other combinations and affiliations, (3) developing and maintaining
relationships with principal suppliers and customers, (4) providing supervision
and oversight of the principal executives in charge of various components of
the business, (5) having oversight and supervision of new product design and
development and of manufacturing processes, including "mass customization"
production strategy and methods for reducing waste in the production process,
and (6) serving as the representative and spokesman for the business with its
various constituencies, including employees, customers, suppliers, shareholders
and the investment community.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
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(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was
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developed entirely on Executive's own time, unless (i) the invention relates
(A) directly to the business of Company, or (B) to Company's actual or
demonstrably anticipated research or development, or (ii) the invention results
from any work performed by Executive for Company.
(l) Termination Without Just Cause. If Executive's employment is
terminated by Company without just cause prior to the third anniversary of
Executive's employment hereunder, then, notwithstanding anything to the
contrary in this Agreement, the restrictions set forth in subsections (d), (e),
(f), (g) and (i) of this Section 7 shall each apply for a time period after the
date of such termination equal to: 60 months, minus the number of full or
partial months that Executive was employed by Company under this Agreement
prior to such termination. If Executive's employment is terminated without
just cause on or after the third anniversary of the date of this Agreement, the
time periods set forth in subsections (d), (e), (f), (g) and (i) shall apply.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
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With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Charles R. Eitel
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. 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.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE: /s/ Charles R. Eitel
---------------------------
Charles R. Eitel
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EXHIBIT 10.4
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and CHARLES R. EITEL, a resident of
Atlanta, Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of November 9, 1993, regarding Executive's circumstances
following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the
Prior Agreement in its entirety, reflects the modified terms which the parties
desire to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
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2. Term of Agreement. The duration of this Agreement (the
"term") shall be for an initial term of five years; provided, from and after
the third anniversary of the date hereof, the term shall be converted to a
rolling, two- year term (commencing on the third anniversary of the date
hereof), and shall be deemed automatically (without further action by either
the Company or Executive) to extend each day for an additional day such that
the remaining term of the Agreement from and after the third anniversary shall
continue to be two 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 years; and, provided further, the
Company may, by notice to Executive at any time after the third anniversary of
the date hereof, cause this Agreement to cease to extend automatically and,
upon such notice, the term of this Agreement shall be two years following such
notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
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(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company
then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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
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Plan, together with any other incentive stock plans adopted by the Company
during the term of this Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans or Executive's Salary Continuation Agreement (see subsection
(c)(vi) below) at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
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pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to
receive upon Executive's termination the compensation and benefits (but only to
the extent Executive actually receives such compensation and benefits)
described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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,
further, after taking into consideration any such reductions, Executive shall
continue to be entitled to receive in the aggregate under this Agreement and
the employment agreement an amount of compensation and benefits at least equal
to 2.99 times Executive's "Base Amount" as defined in Code Section 280G, and
any amounts paid under paragraphs (i), (ii) and (iv) of this Agreement shall be
paid in the manner provided in such paragraphs. The time periods for which
compensation and benefits will be provided with respect to paragraphs (i) (ii)
and (iv) below is referred to herein as the "Continuation Period", which means
the time period remaining from the date of Executive's Voluntary or Involuntary
Termination (as described in subsection (b) above) to the end of the remaining
term of this Agreement as provided in Section 2 above.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination; provided, however, that the salary payments provided for hereunder
shall be paid in a single lump sum payment, to be paid not later than 30 days
after Executive's termination of employment; and, provided further, 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 3(i)
above) on the date Executive's employment is terminated. For purposes hereof,
Executive's "current salary" shall be the highest rate in effect during the
six-month period prior to Executive's termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which Executive's employment
terminates equal to the Average Bonus multiplied by the number of days
Executive worked in such year divided by 365 days. Any bonus amounts that
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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at
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its expense at the same level and in the same manner as if Executive's
employment had not terminated (subject to the customary changes in such
coverages upon Executive's retirement or reaching age 65). Any additional
coverages 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 Executive was paying for such
coverages at the time of termination shall be paid by Executive by separate
check payable to the Company each month in advance (or in such other manner as
the Company may agree). If the terms of any benefit plan referred to in this
subsection (c)(iii) do not permit continued participation by Executive, the
Company will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this subsection shall be
applied against and reduce the period for which COBRA benefits will be
provided. If Executive is covered by a split-dollar or similar life insurance
program at the date of termination, Executive shall have the option in
Executive's sole discretion to have such policy transferred to Executive upon
termination, provided that, except as may otherwise be provided in a separate
agreement, the Company is paid for its interest (i.e., the cash surrender
value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for the Continuation Period (at which point Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (c)(ii) of
this Section 4 shall be treated (unless otherwise excluded under the terms of
such retirement plans) as compensation when computing benefits under such
plans. For purposes of the Savings Plan, 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. To
the extent permissible under applicable law, 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 Executive and, if applicable, Executive's beneficiary, a supplemental
benefit equal to the present value on the date of termination of employment
(calculated as provided in each plan) of the excess of (A) the benefit
Executive would have been paid under such plan if Executive had continued to be
covered for the Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent
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with this immediate vesting requirement, the provisions of this paragraph (v)
shall constitute an amendment of Executive's restricted stock agreements issued
under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement. If Executive
is entitled to benefits under this Section 4(c), he will be treated as having
his employment terminated by the Company without "Cause" as described in the
Salary Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 the
entire Continuation Period.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax
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Counsel's determination shows that payment to Executive of Full Severance
provides Executive with higher net after-tax income, then the Full Severance
shall be payable to Executive. If Tax Counsel's determination shows that
Reduced Severance provides Executive with higher net after-tax income, then
Reduced Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
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6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Charles R. Eitel
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live
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(including, in the event Executive dies after a Voluntary or Involuntary
Termination, the amounts and benefits described in Section 4(c) hereof) shall
be paid and provided in accordance with the terms of this Agreement to the
executors, administrators, heirs or personal representatives of Executive's
estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
/s/ Ray C. Anderson
By: ----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
/s/ Raymond S. Willoch
Attest: ------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Charles R. Eitel
------------------------------------
Charles R. Eitel
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
BRIAN L. DEMOURA, a resident of the State of Maine ("Executive").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an employment agreement,
effective as of September 8, 1995, setting forth the terms of Executive's
employment with the Company (the "Prior Agreement");
WHEREAS, the parties desire to continue the employment arrangement and
to modify the Prior Agreement in certain respects; and
WHEREAS, the terms of this Agreement, which continues, amends and
restates the Prior Agreement in its entirety, reflect the modified terms of
employment which the parties desire to have govern their employment
relationship commencing on the date hereof.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President
of the Company (and President and Chief Executive Officer of the Interface
Interior Fabrics Group), 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 President, 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 Executive. Executive may be
relocated, Executive's titles and duties may be changed, and Executive may be
promoted to a higher position within the Company, but Executive 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 President or 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without
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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, Executive may invest in no more than one percent of the
outstanding stock or securities of any competitor, the stock or securities of
which are traded on a national stock exchange of any country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or Executive) to
extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two 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 years;
and, provided further, the Company may, by notice to Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the term of
this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (vi) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (x) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans or
his Salary Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to receive benefits
under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being
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paid as of the date of termination. For purposes hereof, Executive's "current
salary" shall be the highest rate in effect during the six-month period prior
to Executive's termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that 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,
however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. (or Guilford of Maine, Inc.,
now known as Interface Interior Fabrics, Inc.) Savings and Investment Plan (the
"Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under
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the terms of such retirement plans) as compensation when computing benefits
under the plans. For purposes of the Savings Plan, 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. To the extent permissible under applicable law, 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 Executive and, if applicable, Executive's beneficiary, a
supplemental benefit equal to the present value on the date of termination of
employment (calculated as provided in each plan) of the excess of (A) the
benefit Executive would have been paid under such plan if Executive had
continued to be covered for the Continuation Period (less any amounts Executive
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 within 30 days of the date of
termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement with the Company, payable in accordance with the terms of said
agreement. If Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the Company without
"Cause" as described in the Salary Continuation Agreement.
(vii) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(viii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day
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activities or engage in any substantial travel, and Executive shall be
reimbursed for all reasonable and necessary out- of-pocket business expenses
incurred in providing such assistance.
(ix) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans and Executive's Salary
Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a
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felony or other crime involving moral turpitude. A termination of Executive
for just cause based on clause (i), (ii) or (iii) of the preceding sentence
shall take effect 30 days after Executive receives from the Company written
notice of intent to terminate and the Company's description of the alleged
cause, unless Executive shall, during such 30-day period, remedy the events or
circumstances constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer
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programs and models), devices (including carpet and fabric manufacturing
equipment), methods (including aesthetic and functional design and
manufacturing methods), techniques (including style and design technology and
plans), drawings (including product or equipment drawings), processes,
financial data (including sales forecasts, sales histories, business plans,
budgets and other forecasts), or lists of actual or potential customers or
suppliers (including identifying information about those customers), whether or
not reduced to writing. Confidential Information subject to this Agreement may
include information that is not a trade secret under applicable law, but such
information not constituting a trade secret shall be treated as Confidential
Information under this Agreement for only a two year period after the
expiration of this Agreement or termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - specialty interior fabrics, including
(A) panel fabrics for open plan office systems, (B) furniture upholstery, (C)
wall and ceiling coverings and (D) window treatments, all for contract,
commercial and institutional markets and customers (including original
equipment manufacturers).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing and maintaining, for contract,
commercial and institutional markets and customers (including original
equipment manufacturers), specialty interior fabrics, including (A) panel
fabrics for open plan furniture systems, (B) furniture upholstery, (C) wall and
ceiling coverings, and (D) window treatments; without limiting the foregoing,
Executive shall be responsible for: (1) preparation of business plans, budgets
and forecasts, (2) development of strategies for pricing of products to
customers, (3) supervision of marketing and sale of products and customer
service, (4) development of overall strategy for such business, (5) design and
development of products, (6) development and maintenance of relationships with
principal customers and suppliers, (7) employment and supervision of key
executives and sales personnel, (8) development of plans for expansion of such
business, including expansion through merger, acquisition, joint venture and
other combinations and affiliations, and (9) supervision and oversight of
interior fabrics manufacturing operations and quality control, including "mass
customization" production strategy and methods for reducing waste in the
production process. Executive acknowledges that he has been informed of and
had an opportunity to discuss with Company the specific activities Executive
will perform as Services, and that Executive understands the scope of the
activities constituting Services.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
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(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
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(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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
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America, without regard to rules relating to the conflict of laws. Executive
hereby consents to the exclusive jurisdiction of the Superior Court of Cobb
County, Georgia and the U.S. District Court in Atlanta, Georgia and hereby
waives any objection Executive might otherwise have to jurisdiction and venue
in such courts in the event either court is requested to resolve a dispute
between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Brian L. DeMoura
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
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13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
--------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
----------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Brian L. DeMoura
------------------------------------------
Brian L. DeMoura
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EXHIBIT 10.6
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and BRIAN L. DEMOURA, a resident of the
State of Maine ("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 (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of September 8, 1995, regarding Executive's
circumstances following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the
Prior Agreement in its entirety, reflects the modified terms which the parties
desire to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
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2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70
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percent of the Voting Stock of the surviving or resulting corporation, or (B) a
transfer of all or substantially all of the property or assets of the Company
other than to an entity of which the Company owns at least 70 percent of the
Voting Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company
then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
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4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans or Executive's Salary Continuation Agreement (see subsection
(c)(vi) below) at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to
receive upon Executive's termination the compensation and benefits (but only to
the extent Executive actually receives such compensation and benefits)
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described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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,
further, after taking into consideration any such reductions, Executive shall
continue to be entitled to receive in the aggregate under this Agreement and
the employment agreement an amount of compensation and benefits at least equal
to 2.99 times Executive's "Base Amount" as defined in Code Section 280G, and
any amounts paid under paragraphs (i), (ii) and (iv) of this Agreement shall be
paid in the manner provided in such paragraphs.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such
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other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection (c)(iii) do not permit continued participation
by Executive, the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program at the date of termination, Executive shall have
the option in Executive's sole discretion to have such policy transferred to
Executive upon termination, provided that, except as may otherwise be provided
in a separate agreement, the Company is paid for its interest (i.e., the cash
surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. (or Guilford of Maine, Inc.,
now known as Interface Interior Fabrics, Inc.) Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement.
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If Executive is entitled to benefits under this Section 4(c), he will be
treated as having his employment terminated by the Company without "Cause" as
described in the Salary Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be
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reduced; provided, however, the Company shall not unreasonably deny the
requests and preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual
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receipt or the expiration of seven days after mailing if sent by registered or
certified express mail, 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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Brian L. DeMoura
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its
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successor), except to the extent (i) the terms of any other agreement, plan or
arrangement pertaining to the parties provide for funding; or (ii) the Company
(or its successor) in its sole discretion elects in whole or in part to fund
the Company's obligations under this Agreement pursuant to a trust arrangement
or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Brian L. DeMoura
-----------------------------------------
Brian L. DeMoura
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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
DANIEL T. HENDRIX, a resident of Atlanta, Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties hereto entered into an employment agreement,
effective as of August 30, 1995, setting forth the terms of Executive's
employment with the Company (the "Prior Agreement");
WHEREAS, the parties desire to continue the employment arrangement and
to modify the Prior Agreement in certain respects; and
WHEREAS, the terms of this Agreement, which continues, amends and
restates the Prior Agreement in its entirety, reflect the modified terms of
employment which the parties desire to have govern their employment
relationship commencing on the date hereof.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President,
Chief Financial Officer and Treasurer 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 Executive.
Executive may be relocated, Executive's titles and duties may be changed, and
Executive may be promoted to a higher position within the Company, but
Executive 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have
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any financial interest in any competitor of the Company; provided, however,
Executive may invest in no more than one percent of the outstanding stock or
securities of any competitor, the stock or securities of which are traded on a
national stock exchange of any country.
4. Term. The duration of this Agreement (the "term") shall be
for an initial term of five years; provided, from and after the third
anniversary of the date hereof, the term shall be converted to a rolling,
two-year term (commencing on the third anniversary of the date hereof), and
shall be deemed automatically (without further action by either the Company or
Executive) to extend each day for an additional day such that the remaining
term of the Agreement from and after the third anniversary shall continue to be
two 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 years; and, provided further, the Company may, by
notice to Executive at any time after the third anniversary of the date hereof,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (vi) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (x) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans or
his Salary Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to receive benefits
under this Section 5(c).
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that 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,
however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the
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compensation payable to Executive under subsections (c)(i) and (ii) above shall
be treated (unless otherwise excluded under the terms of such retirement plans)
as compensation when computing benefits under the plans. For purposes of the
Savings Plan, 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. To the extent permissible under
applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement with the Company, payable in accordance with the terms of said
agreement. If Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the Company without
"Cause" as described in the Salary Continuation Agreement.
(vii) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(viii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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
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fully with and devote Executive's reasonable best efforts to providing
assistance requested by the Company. Such assistance shall not require
Executive to be active in the Company's day-to-day activities or engage in any
substantial travel, and Executive shall be reimbursed for all reasonable and
necessary out-of-pocket business expenses incurred in providing such
assistance.
(ix) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans and Executive's Salary
Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the
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established lawful policies of the Company applicable to persons occupying the
same or similar positions, (iii) Executive's material breach of this Agreement,
or (iv) Executive's conviction of a felony or other crime involving moral
turpitude. A termination of Executive for just cause based on clause (i), (ii)
or (iii) of the preceding sentence shall take effect 30 days after Executive
receives from the Company written notice of intent to terminate and the
Company's description of the alleged cause, unless Executive shall, during such
30-day period, remedy the events or circumstances constituting just cause;
provided, however, 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).
(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, car allowance) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the CEO or Board of Directors (or Committee of
the Board), but shall not be reduced or eliminated. With regard to the bonus
program in effect for senior executives generally, the maximum achievement
factor that Executive may accomplish with regard to the financial and
non-financial objectives under such bonus program shall be 125%, rather than
110%.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time. In addition, the
Company shall provide Executive with a split- dollar insurance policy (death
benefit of $2 million), governed under the terms of a separate agreement
related to such policy. The Company also shall afford Executive the
opportunity, in each of the initial five years that this Agreement is in
effect, to earn an extraordinary bonus of up to $100,000 per annum if certain
performance criteria and targets are achieved (such criteria and targets to be
mutually agreed in writing by the Company and Executive).
(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.
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7. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - (A) broadloom carpet, carpet tile, and
broadloom carpet in six-foot and competitive widths, (B) specialty interior
fabrics (wall, panel, window and upholstery), and (C) specialty chemicals and
interior architectural products (including raised/access floors) for contract,
commercial and institutional markets and customers (i.e., all markets other
than residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, all financial
affairs, including (A) maintenance of appropriate books and records, (B)
preparation of financial statements in accordance with applicable generally
accepted accounting principles, (C) development and maintenance of proper
financial controls, (D) supervision of compliance with tax laws in all
jurisdictions, (E) assisting in development of strategy for expansion of the
business, including expansion by merger, acquisition, joint venture and other
combinations and affiliations, (F) preparation of reports to shareholders and
governmental and other regulatory agencies and
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bodies, (G) development of strategy for financing the business through loans,
sale of securities and other financing methods, procedures and products, (H)
development and maintenance of relationships with independent accountants,
financial institutions, investment banks and the investment community and
analysts, and (I) development, supervision and oversight of employee benefit
plans and programs. Executive acknowledges that he has been informed of and had
an opportunity to discuss with Company the specific activities Executive will
perform as Services, and that Executive understands the scope of the activities
constituting Services.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
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(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was
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developed entirely on Executive's own time, unless (i) the invention relates
(A) directly to the business of Company, or (B) to Company's actual or
demonstrably anticipated research or development, or (ii) the invention results
from any work performed by Executive for Company.
(l) Termination Without Just Cause. If Executive's employment is
terminated by Company without just cause prior to the third anniversary of
Executive's employment hereunder, then, notwithstanding anything to the
contrary in this Agreement, the restrictions set forth in subsections (d), (e),
(f), (g) and (i) of this Section 7 shall each apply for a time period after the
date of such termination equal to: 60 months, minus the number of full or
partial months that Executive was employed by Company under this Agreement
prior to such termination. If Executive's employment is terminated without
just cause on or after the third anniversary of the date of this Agreement, the
time periods set forth in subsections (d), (e), (f), (g) and (i) shall apply.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
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With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Daniel T. Hendrix
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. 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.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Daniel T. Hendrix
-------------------------------------
Daniel T. Hendrix
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EXHIBIT 10.8
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and DANIEL T. HENDRIX, a resident of
Atlanta, Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of August 30, 1995, regarding Executive's circumstances
following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the
Prior Agreement in its entirety, reflects the modified terms which the parties
desire to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
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2. Term of Agreement. The duration of this Agreement (the
"term") shall be for an initial term of five years; provided, from and after
the third anniversary of the date hereof, the term shall be converted to a
rolling, two- year term (commencing on the third anniversary of the date
hereof), and shall be deemed automatically (without further action by either
the Company or Executive) to extend each day for an additional day such that
the remaining term of the Agreement from and after the third anniversary shall
continue to be two 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 years; and, provided further, the
Company may, by notice to Executive at any time after the third anniversary of
the date hereof, cause this Agreement to cease to extend automatically and,
upon such notice, the term of this Agreement shall be two years following such
notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
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(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company
then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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
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Plan, together with any other incentive stock plans adopted by the Company
during the term of this Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans or Executive's Salary Continuation Agreement (see subsection
(c)(vi) below) at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
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pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to
receive upon Executive's termination the compensation and benefits (but only to
the extent Executive actually receives such compensation and benefits)
described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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,
further, after taking into consideration any such reductions, Executive shall
continue to be entitled to receive in the aggregate under this Agreement and
the employment agreement an amount of compensation and benefits at least equal
to 2.99 times Executive's "Base Amount" as defined in Code Section 280G, and
any amounts paid under paragraphs (i), (ii) and (iv) of this Agreement shall be
paid in the manner provided in such paragraphs. The time periods for which
compensation and benefits will be provided with respect to paragraphs (i) (ii)
and (iv) below is referred to herein as the "Continuation Period", which means
the time period remaining from the date of Executive's Voluntary or Involuntary
Termination (as described in subsection (b) above) to the end of the remaining
term of this Agreement as provided in Section 2 above.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination; provided, however, that the salary payments provided for hereunder
shall be paid in a single lump sum payment, to be paid not later than 30 days
after Executive's termination of employment; and, provided further, 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 3(i)
above) on the date Executive's employment is terminated. For purposes hereof,
Executive's "current salary" shall be the highest rate in effect during the
six-month period prior to Executive's termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which Executive's employment
terminates equal to the Average Bonus multiplied by the number of days
Executive worked in such year divided by 365 days. Any bonus amounts that
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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at
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its expense at the same level and in the same manner as if Executive's
employment had not terminated (subject to the customary changes in such
coverages upon Executive's retirement or reaching age 65). Any additional
coverages 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 Executive was paying for such
coverages at the time of termination shall be paid by Executive by separate
check payable to the Company each month in advance (or in such other manner as
the Company may agree). If the terms of any benefit plan referred to in this
subsection (c)(iii) do not permit continued participation by Executive, the
Company will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this subsection shall be
applied against and reduce the period for which COBRA benefits will be
provided. If Executive is covered by a split-dollar or similar life insurance
program at the date of termination, Executive shall have the option in
Executive's sole discretion to have such policy transferred to Executive upon
termination, provided that, except as may otherwise be provided in a separate
agreement, the Company is paid for its interest (i.e., the cash surrender
value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for the Continuation Period (at which point Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (c)(ii) of
this Section 4 shall be treated (unless otherwise excluded under the terms of
such retirement plans) as compensation when computing benefits under such
plans. For purposes of the Savings Plan, 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. To
the extent permissible under applicable law, 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 Executive and, if applicable, Executive's beneficiary, a supplemental
benefit equal to the present value on the date of termination of employment
(calculated as provided in each plan) of the excess of (A) the benefit
Executive would have been paid under such plan if Executive had continued to be
covered for the Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent
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with this immediate vesting requirement, the provisions of this paragraph (v)
shall constitute an amendment of Executive's restricted stock agreements issued
under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement. If Executive
is entitled to benefits under this Section 4(c), he will be treated as having
his employment terminated by the Company without "Cause" as described in the
Salary Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 the
entire Continuation Period.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax
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Counsel's determination shows that Reduced Severance provides Executive with
higher net after-tax income, then Reduced Severance shall be payable to
Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
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6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Daniel T. Hendrix
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live
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(including, in the event Executive dies after a Voluntary or Involuntary
Termination, the amounts and benefits described in Section 4(c) hereof) shall
be paid and provided in accordance with the terms of this Agreement to the
executors, administrators, heirs or personal representatives of Executive's
estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Daniel T. Hendrix
----------------------------------------
Daniel T. Hendrix
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
GORDON D. WHITENER, a resident of the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President
of the Company (and President and Chief Executive Officer of Interface
Americas, Inc.), and shall perform such duties and functions for the Company
and its subsidiaries and affiliates as shall be specified from time to time by
the President, 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 Executive. Executive may be relocated,
Executive's titles and duties may be changed, and Executive may be promoted to
a higher position within the Company, but Executive 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 President or 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 enterprise 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 Aviation Group, Inc.) 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,
Executive may invest in no more than one percent of the outstanding stock or
securities of any competitor, the stock or securities of which are traded on a
national stock exchange of any country.
4. Term. The duration of this Agreement (the "term") shall be
for an initial term of five years; provided, from and after the third
anniversary of the date hereof, the term shall be converted
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to a rolling, two-year term (commencing on the third anniversary of the date
hereof), and shall be deemed automatically (without further action by either
the Company or Executive) to extend each day for an additional day such that
the remaining term of the Agreement from and after the third anniversary shall
continue to be two 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 years; and, provided further, the
Company may, by notice to Executive at any time after the third anniversary of
the date hereof, cause this Agreement to cease to extend automatically and,
upon such notice, the term of this Agreement shall be two years following such
notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (vi) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (x) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans or
his Salary Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to receive benefits
under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period
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equal to one-twelfth of the average of the bonuses paid to Executive for the
two calendar years immediately preceding the year in which such termination
occurs ("Average Bonus"). Executive shall also receive a prorated bonus for
the year in which such termination occurs equal to the Average Bonus multiplied
by the number of days Executive worked in such year divided by 365 days. Said
prorated bonus shall be paid within 30 days of the date of termination. Any
bonus amounts that 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, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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
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Executive and, if applicable, Executive's beneficiary, a supplemental benefit
equal to the present value on the date of termination of employment (calculated
as provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement with the Company, payable in accordance with the terms of said
agreement. If Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the Company without
"Cause" as described in the Salary Continuation Agreement.
(vii) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(viii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out- of-pocket business expenses incurred in providing such
assistance.
(ix) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then
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Executive shall be entitled to no payment or compensation whatsoever from the
Company under this Agreement, other than as may be due Executive through
Executive's last day of employment. If Executive's employment is terminated
due to Executive's disability or death (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 plans or, in the case of death, its life insurance payment policy in
effect for executives of Executive's level or pursuant to the terms of any
separate agreement concerning split-dollar or similar life insurance; provided,
however, Executive or Executive's estate, as the case may be, shall not by
operation of this provision forfeit any rights in which Executive is vested at
the time of Executive's disability or death (including, without limitation, the
rights and benefits provided under applicable retirement plans and Executive's
Salary Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, such termination shall take effect
immediately upon the
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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).
(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, car allowance) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated. With regard
to the bonus program in effect for senior executives generally, the maximum
achievement factor that Executive may accomplish with regard to the financial
and non-financial objectives under such bonus program shall be 125%, rather
than 110%.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time. In addition, the
Company shall provide Executive with a split- dollar insurance policy (death
benefit of $2 million), governed under the terms of a separate agreement
related to such policy. The Company also shall afford Executive the
opportunity, in each of the initial five years that this Agreement is in
effect, to earn an extraordinary bonus of up to $100,000 per annum if certain
performance criteria and targets are achieved (such criteria and targets to be
mutually agreed in writing by the Company and Executive).
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
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(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - (A) broadloom carpet, carpet tile, and
broadloom carpet in six-foot and competitive widths, and (B) specialty
chemicals and interior architectural products (including raised/access floors)
for contract, commercial and institutional markets and customers (i.e., all
markets other than residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and reclaiming, for
contract, commercial and institutional markets and customers (i.e., all markets
other than residential), (A) broadloom carpet, carpet tile and broadloom carpet
in six-foot and competitive widths, and (B) specialty chemicals and interior
architectural products (including raised/access floors); without limiting the
foregoing, Executive shall be responsible for: (1) preparation of business
plans, budgets and forecasts, (2) development of strategies for pricing of
products to customers, (3) supervision of marketing and sale of products and
customer service, (4) development of overall strategy for such business, (5)
design and development of products, (6) development and maintenance of
relationships with principal customers and suppliers, (7) employment and
supervision of key executives and sales personnel, (8) development of plans for
expansion of such business, including expansion through merger, acquisition,
joint venture and other combinations and affiliations, (9) supervision and
oversight of carpet and carpet tile, chemical, raised floor and interior
architectural products manufacturing and production operations and quality
control, including "mass customization" production strategy and methods for
reducing waste in the production process, and (10) supervision
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and oversight of distribution network of owned and aligned or licensed
floorcovering dealers/contractors.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
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(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
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(l) Termination Without Just Cause. If Executive's employment is
terminated by Company without just cause prior to the third anniversary of
Executive's employment hereunder, then, notwithstanding anything to the
contrary in this Agreement, the restrictions set forth in subsections (d), (e),
(f), (g) and (i) of this Section 7 shall each apply for a time period after the
date of such termination equal to: 60 months, minus the number of full or
partial months that Executive was employed by Company under this Agreement
prior to such termination. If Executive's employment is terminated without
just cause on or after the third anniversary of the date of this Agreement, the
time periods set forth in subsections (d), (e), (f), (g) and (i) shall apply.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
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To Executive: Gordon D. Whitener
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. 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.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Gordon D. Whitener
-------------------------------------
Gordon D. Whitener
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EXHIBIT 10.10
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and GORDON D. WHITENER, a resident of
the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of July 25, 1995, regarding Executive's circumstances
following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the
Prior Agreement in its entirety, reflects the modified terms which the parties
desire to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
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2. Term of Agreement. The duration of this Agreement (the
"term") shall be for an initial term of five years; provided, from and after
the third anniversary of the date hereof, the term shall be converted to a
rolling, two-year term (commencing on the third anniversary of the date
hereof), and shall be deemed automatically (without further action by either
the Company or Executive) to extend each day for an additional day such that
the remaining term of the Agreement from and after the third anniversary shall
continue to be two 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 years; and, provided further, the
Company may, by notice to Executive at any time after the third anniversary of
the date hereof, cause this Agreement to cease to extend automatically and,
upon such notice, the term of this Agreement shall be two years following such
notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
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(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company
then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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
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Plan, together with any other incentive stock plans adopted by the Company
during the term of this Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans or Executive's Salary Continuation Agreement (see subsection
(c)(vi) below) at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
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pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to
receive upon Executive's termination the compensation and benefits (but only to
the extent Executive actually receives such compensation and benefits)
described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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,
further, after taking into consideration any such reductions, Executive shall
continue to be entitled to receive in the aggregate under this Agreement and
the employment agreement an amount of compensation and benefits at least equal
to 2.99 times Executive's "Base Amount" as defined in Code Section 280G, and
any amounts paid under paragraphs (i), (ii) and (iv) of this Agreement shall be
paid in the manner provided in such paragraphs. The time periods for which
compensation and benefits will be provided with respect to paragraphs (i) (ii)
and (iv) below is referred to herein as the "Continuation Period", which means
the time period remaining from the date of Executive's Voluntary or Involuntary
Termination (as described in subsection (b) above) to the end of the remaining
term of this Agreement as provided in Section 2 above.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination; provided, however, that the salary payments provided for hereunder
shall be paid in a single lump sum payment, to be paid not later than 30 days
after Executive's termination of employment; and, provided further, 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 3(i)
above) on the date Executive's employment is terminated. For purposes hereof,
Executive's "current salary" shall be the highest rate in effect during the
six-month period prior to Executive's termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which Executive's employment
terminates equal to the Average Bonus multiplied by the number of days
Executive worked in such year divided by 365 days. Any bonus amounts that
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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at
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<PAGE>
its expense at the same level and in the same manner as if Executive's
employment had not terminated (subject to the customary changes in such
coverages upon Executive's retirement or reaching age 65). Any additional
coverages 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 Executive was paying for such
coverages at the time of termination shall be paid by Executive by separate
check payable to the Company each month in advance (or in such other manner as
the Company may agree). If the terms of any benefit plan referred to in this
subsection (c)(iii) do not permit continued participation by Executive, the
Company will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this subsection shall be
applied against and reduce the period for which COBRA benefits will be
provided. If Executive is covered by a split-dollar or similar life insurance
program at the date of termination, Executive shall have the option in
Executive's sole discretion to have such policy transferred to Executive upon
termination, provided that, except as may otherwise be provided in a separate
agreement, the Company is paid for its interest (i.e., the cash surrender
value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for the Continuation Period (at which point Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (c)(ii) of
this Section 4 shall be treated (unless otherwise excluded under the terms of
such retirement plans) as compensation when computing benefits under such
plans. For purposes of the Savings Plan, 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. To
the extent permissible under applicable law, 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 Executive and, if applicable, Executive's beneficiary, a supplemental
benefit equal to the present value on the date of termination of employment
(calculated as provided in each plan) of the excess of (A) the benefit
Executive would have been paid under such plan if Executive had continued to be
covered for the Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent
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with this immediate vesting requirement, the provisions of this paragraph (v)
shall constitute an amendment of Executive's restricted stock agreements issued
under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement. If Executive
is entitled to benefits under this Section 4(c), he will be treated as having
his employment terminated by the Company without "Cause" as described in the
Salary Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 the
entire Continuation Period.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax
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Counsel's determination shows that Reduced Severance provides Executive with
higher net after-tax income, then Reduced Severance shall be payable to
Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
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6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Gordon D. Whitener
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live
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(including, in the event Executive dies after a Voluntary or Involuntary
Termination, the amounts and benefits described in Section 4(c) hereof) shall
be paid and provided in accordance with the terms of this Agreement to the
executors, administrators, heirs or personal representatives of Executive's
estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Gordon D. Whitener
----------------------------------------
Gordon D. Whitener
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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, 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 resident of Atlanta, Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties hereto entered into an employment agreement,
effective as of August 1, 1996, setting forth the terms of Executive's
employment with the Company (the "Prior Agreement");
WHEREAS, the parties desire to continue the employment arrangement and
to modify the Prior Agreement in certain respects; and
WHEREAS, the terms of this Agreement, which continues, amends and
restates the Prior Agreement in its entirety, reflect the modified terms of
employment which the parties desire to have govern their employment
relationship commencing on the date hereof.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Corporate 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 Executive.
Executive may be relocated, Executive's titles and duties may be changed, and
Executive may be promoted to a higher position within the Company, but
Executive 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 enterprise 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.
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In addition, under no circumstances will Executive have any financial interest
in any competitor of the Company; provided, however, Executive may invest in no
more than one percent of the outstanding stock or securities of any competitor,
the stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or Executive) to
extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two 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 years;
and, provided further, the Company may, by notice to Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the term of
this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (vi) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (x) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans or
his Salary Continuation Agreement (see clause (vi) below) at the time of
Executive's termination shall not make Executive ineligible to receive benefits
under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being
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paid as of the date of termination. For purposes hereof, Executive's "current
salary" shall be the highest rate in effect during the six-month period prior
to Executive's termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30 days
of the date of termination. Any bonus amounts that 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, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing
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benefits under the plans. For purposes of the Savings Plan, 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. To the extent permissible under applicable law, 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 Executive and, if applicable,
Executive's beneficiary, a supplemental benefit equal to the present value on
the date of termination of employment (calculated as provided in each plan) of
the excess of (A) the benefit Executive would have been paid under such plan if
Executive had continued to be covered for the Continuation Period (less any
amounts Executive 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 within 30
days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement with the Company, payable in accordance with the terms of said
agreement. If Executive is entitled to benefits under this Section 5(c), he
will be treated as having his employment terminated by the Company without
"Cause" as described in the Salary Continuation Agreement.
(vii) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(viii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day
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activities or engage in any substantial travel, and Executive shall be
reimbursed for all reasonable and necessary out- of-pocket business expenses
incurred in providing such assistance.
(ix) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans and Executive's Salary
Continuation Agreement with the Company).
(x) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a
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felony or other crime involving moral turpitude. A termination of Executive
for just cause based on clause (i), (ii) or (iii) of the preceding sentence
shall take effect 30 days after Executive receives from the Company written
notice of intent to terminate and the Company's description of the alleged
cause, unless Executive shall, during such 30-day period, remedy the events or
circumstances constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, car allowance) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the CEO or Board of Directors (or Committee of
the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer
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programs and models), devices (including carpet and fabric manufacturing
equipment), methods (including aesthetic and functional design and
manufacturing methods), techniques (including style and design technology and
plans), drawings (including product or equipment drawings), processes,
financial data (including sales forecasts, sales histories, business plans,
budgets and other forecasts), or lists of actual or potential customers or
suppliers (including identifying information about those customers), whether or
not reduced to writing. Confidential Information subject to this Agreement may
include information that is not a trade secret under applicable law, but such
information not constituting a trade secret shall be treated as Confidential
Information under this Agreement for only a two year period after the
expiration of this Agreement or termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - (A) broadloom carpet, carpet tile, and
broadloom carpet in six-foot and competitive widths, (B) specialty interior
fabrics (wall, panel, window and upholstery), and (C) specialty chemicals and
interior architectural products (including raised/access floors) for contract,
commercial and institutional markets and customers (i.e., all markets other
than residential).
(v) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
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(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(h) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(i) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable. The foregoing shall not operate to preclude
Executive from retaining ownership and control of his personal "retrieval file"
of sample and form legal documents, provided that Executive does not violate
the confidentiality undertaking set forth in subsection (b) above.
(j) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly,
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this power and agency being coupled with an interest and being irrevocable.
This constitutes Company's written notification that this assignment does not
apply to an invention for which no equipment, supplies, facility or trade
secret information of Company was used and which was developed entirely on
Executive's own time, unless (i) the invention relates (A) directly to the
business of Company, or (B) to Company's actual or demonstrably anticipated
research or development, or (ii) the invention results from any work performed
by Executive for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
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To Executive: Raymond S. Willoch
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. 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.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Raymond S. Willoch
-------------------------------------
Raymond S. Willoch
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EXHIBIT 10.12
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and RAYMOND S. WILLOCH, a resident of
Atlanta, Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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; and
WHEREAS, the parties hereto entered into a prior change in control
agreement effective as of August 1, 1996, regarding Executive's circumstances
following a Change in Control (the "Prior Agreement"); and
WHEREAS, the parties desire to continue the Prior Agreement and to
modify it in certain respects; and
WHEREAS, this Agreement, which continues, amends and restates the
Prior Agreement in its entirety, reflects the modified terms which the parties
desire to have govern Executive's circumstances following a Change in Control.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
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2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70
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percent of the Voting Stock of the surviving or resulting corporation, or (B) a
transfer of all or substantially all of the property or assets of the Company
other than to an entity of which the Company owns at least 70 percent of the
Voting Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of directors of the Company
then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
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4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans or Executive's Salary Continuation Agreement (see subsection
(c)(vi) below) at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
shall be reduced to the extent that Executive receives or is entitled to
receive upon Executive's termination the compensation and benefits (but only to
the extent Executive actually receives such compensation and benefits)
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described in paragraphs (i), (ii), (iii), (iv) and (v) of this subsection (c)
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,
further, after taking into consideration any such reductions, Executive shall
continue to be entitled to receive in the aggregate under this Agreement and
the employment agreement an amount of compensation and benefits at least equal
to 2.99 times Executive's "Base Amount" as defined in Code Section 280G, and
any amounts paid under paragraphs (i), (ii) and (iv) of this Agreement shall be
paid in the manner provided in such paragraphs.
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such
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other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection (c)(iii) do not permit continued participation
by Executive, the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program at the date of termination, Executive shall have
the option in Executive's sole discretion to have such policy transferred to
Executive upon termination, provided that, except as may otherwise be provided
in a separate agreement, the Company is paid for its interest (i.e., the cash
surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Salary Continuation Agreement. From and after
Executive's date of termination, Executive shall continue to be covered by, and
entitled to the benefits provided under, Executive's Salary Continuation
Agreement, payable in accordance with the terms of said agreement. If Executive
is entitled to benefits under this Section 4(c), he will be treated as having
his
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employment terminated by the Company without "Cause" as described in the Salary
Continuation Agreement.
(vii) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
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(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Raymond S. Willoch
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects
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in whole or in part to fund the Company's obligations under this Agreement
pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Raymond S. Willoch
----------------------------------------
Raymond S. Willoch
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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
JEFFREY A. GOLDBERG, a resident of the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company or one or
more of its direct and indirect subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 President and Chief
Executive Officer of Interface Americas Services, Inc. (a subsidiary 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
President, Chief Executive Officer ("CEO") or Board of Directors of the Company
or the President of Interface Americas, Inc.; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
Executive. Executive may be relocated, Executive's titles and duties may be
changed, and Executive may be promoted to a higher position within the Company,
but Executive 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 President or CEO of the Company, or President of
Interface Americas, 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by
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either the Company or Executive) to extend each day for an additional day such
that the remaining term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice
to Executive, cause this Agreement to cease to extend automatically and, upon
such notice, the term of this Agreement shall be two years following such
notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365
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days. Said prorated bonus shall be paid within 30 days of the date of
termination. Any bonus amounts that Executive had previously earned from the
Company (or its subsidiaries) but which may not yet have been paid as of the
date of termination shall not be affected by this provision; provided, however,
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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company (or its subsidiary, as the case
may be) is paid for its interest (i.e., the cash surrender value) in the policy
upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be
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covered for the Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out- of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
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(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
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(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
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(iv) "Products" - broadloom carpet, carpet tile, broadloom
carpet in six-foot and competitive widths, other floorcovering products and
accessories, and raised/access flooring products and systems for contract,
commercial and institutional markets and customers (i.e., all markets other
than residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of distributing, installing, replacing (including methods of lifting
and moving furniture and equipment in connection with floorcovering
replacement), maintaining and reclaiming, for contract, commercial and
institutional markets and customers (i.e., all markets other than residential),
broadloom carpet, carpet tile, broadloom carpet in six-foot and competitive
widths, other floorcovering products and accessories, and raised/access
flooring products and systems; without limiting the foregoing, Executive shall
be responsible for: (A) preparation of business plans, budgets and forecasts,
(B) development of strategies for pricing of products and services to
customers, (C) supervision of marketing and sale of products and services, (D)
supervision of installation and other services, including customer service, (E)
maintenance of relationships with independent floorcovering
dealers/contractors, (F) supervision of distribution network of owned
floorcovering dealers/contractors, (G) development of overall strategy for the
distribution and service business, (H) employment and supervision of key
executives and sales personnel, (I) development of plans for expansion of the
distribution network and service business, including expansion by acquisition,
license, contract and other means, and (J) development and maintenance of
relationships with principal customers and suppliers.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies
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in Executive's possession or control relating in any way to Company's business,
which at all times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any
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assignments or documents Executive fails or refuses promptly to execute and
deliver, this power and agency being coupled with an interest and being
irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Jeffrey A. Goldberg
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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
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the remaining provisions shall constitute their agreement with respect to the
subject matter hereof, and all such remaining provisions shall continue in full
force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
--------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE: /s/ Jeffrey A. Goldberg
-----------------------------
Jeffrey A. Goldberg
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EXHIBIT 10.14
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and JEFFREY A. GOLDBERG, a resident of
the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, Executive is a key employee of the Company, or one or more of
its direct and indirect subsidiaries, and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
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3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company (or any of its subsidiaries), or (ii) Executive's
conviction of a felony or other crime involving moral turpitude. A termination
of Executive for Cause based on clause (i) of the preceding sentence shall take
effect 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 (ii) above shall take effect immediately
upon the Company's delivery of the termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G, and any amounts paid under
paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that Executive had previously earned from the Company (or its
subsidiaries) but which may not yet have been paid as of the date of
termination shall not be affected by this provision; provided, however, 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; and, provided further, 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 on the date Executive's employment is terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such other manner as the Company may agree). If
the terms of any benefit plan referred to in this subsection (c)(iii) do not
permit continued participation by Executive, the Company will arrange for other
coverage at its expense providing substantially similar benefits. The
coverages provided for in this subsection shall be applied against and reduce
the period for which COBRA benefits will be provided. If Executive is covered
by a split-dollar or similar life insurance program at the date of termination,
Executive shall have the option in Executive's sole discretion to have such
policy transferred to Executive upon termination, provided that, except as may
otherwise be provided in
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a separate agreement, the Company (or its subsidiary, as the case may be) is
paid for its interest (i.e., the cash surrender value) in the policy upon such
transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such
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restricted stock agreements as continuing to be actively employed by the
Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
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(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
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To Executive: Jeffrey A. Goldberg
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 60 days after notification by the Board that Executive's claim has
been
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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 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(s). 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, however,
that the fee for the arbitrator(s) shall be shared equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Jeffrey A. Goldberg
--------------------------------------
Jeffrey A. Goldberg
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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
ALAN S. KABUS, a resident of the State of California ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as Vice President of the
Company (and President and Chief Executive Officer of Bentley Mills, Inc.), and
shall perform such duties and functions for the Company and its subsidiaries
and affiliates as shall be specified from time to time by the President, Chief
Executive Officer ("CEO") or Board of Directors of the Company or the President
of Interface Americas, Inc.; Executive hereby accepts such employment and
agrees to perform such executive duties as may be assigned to Executive.
Executive may be relocated, Executive's titles and duties may be changed, and
Executive may be promoted to a higher position within the Company, but
Executive 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 President or CEO of the Company, or President of
Interface Americas, 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by
<PAGE>
either the Company or Executive) to extend each day for an additional day such
that the remaining term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice
to Executive, cause this Agreement to cease to extend automatically and, upon
such notice, the term of this Agreement shall be two years following such
notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365
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days. Said prorated bonus shall be paid within 30 days of the date of
termination. Any bonus amounts that 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, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive would have been required to
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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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out-of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
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(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
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(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
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(iv) "Products" - broadloom carpet, carpet tile and
broadloom carpet in six-foot and competitive widths for contract, commercial
and institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and reclaiming, for
contract, commercial and institutional markets and customers (i.e., all markets
other than residential), carpet, including carpet tile; without limiting the
foregoing, Executive shall be responsible for: (A) preparation of business
plans, budgets and forecasts, (B) development of strategies for pricing of
products to customers, (C) supervision of marketing and sale of products and
customer service, (D) development of overall strategy for such business, (E)
design and development of products, (F) development and maintenance of
relationships with principal customers and suppliers, (G) employment and
supervision of key executives and sales personnel, (H) development of plans for
expansion of such business, including expansion through merger, acquisition,
joint venture and other combinations and affiliations, and (I) supervision and
oversight of broadloom carpet and carpet tile manufacturing operations and
quality control, including "mass customization" production strategy and methods
for reducing waste in the production process.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
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(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
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(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Alan S. Kabus
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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
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the remaining provisions shall constitute their agreement with respect to the
subject matter hereof, and all such remaining provisions shall continue in full
force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Alan S. Kabus
-------------------------------------
Alan S. Kabus
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EXHIBIT 10.16
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and ALAN S. KABUS, a resident of the
State of California ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
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3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G, and any amounts paid under
paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such other manner as the Company may agree). If
the terms of any benefit plan referred to in this subsection (c)(iii) do not
permit continued participation by Executive, the Company will arrange for other
coverage at its expense providing substantially similar benefits. The
coverages provided for in this subsection shall be applied against and reduce
the period for which COBRA benefits will be provided. If Executive is covered
by a split-dollar or similar life insurance program at the date of termination,
Executive shall have the option in Executive's sole discretion to have such
policy transferred to Executive upon termination, provided that, except as may
otherwise be provided in a separate agreement, the Company is paid for its
interest (i.e., the cash surrender value) in the policy upon such transfer.
5
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(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
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5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section
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5, either (i) the amounts paid to Executive unintentionally constituted Excess
Severance Payments and triggered the Excise Tax, even though the payments to
Executive were reduced in an effort to avoid such result; or (ii) the amounts
paid to Executive were reduced by more than was necessary to avoid triggering
the Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Alan S. Kabus
at the last address and fax number
shown on the records of the Company
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Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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
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having jurisdiction. In the event 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) 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 Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Alan S. Kabus
----------------------------------------
Alan S. Kabus
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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
JOYCE D. LAVALLE, a resident of the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company or one or
more of its direct and indirect subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 President and Chief
Executive Officer of Prince Street Technologies, Ltd. (a subsidiary 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
President, Chief Executive Officer ("CEO") or Board of Directors of the Company
or the President of Interface Americas, Inc.; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
Executive. Executive may be relocated, Executive's titles and duties may be
changed, and Executive may be promoted to a higher position within the Company,
but Executive will not be demoted or given lesser titles.
2. Duties. Executive shall devote her full business related time
and best efforts to accomplishing such executive duties at such locations as
may be requested by the President or CEO of the Company, or President of
Interface Americas, 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by
<PAGE>
either the Company or Executive) to extend each day for an additional day such
that the remaining term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice
to Executive, cause this Agreement to cease to extend automatically and, upon
such notice, the term of this Agreement shall be two years following such
notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
her employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive her
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365
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days. Said prorated bonus shall be paid within 30 days of the date of
termination. Any bonus amounts that Executive had previously earned from the
Company (or its subsidiaries) but which may not yet have been paid as of the
date of termination shall not be affected by this provision; provided, however,
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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company (or its subsidiary, as the case
may be) is paid for its interest (i.e., the cash surrender value) in the policy
upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be
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covered for the Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out-of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
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(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
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(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
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(iv) "Products" - broadloom carpet, carpet tile and
broadloom carpet in six-foot and competitive widths for contract, commercial
and institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and reclaiming, for
contract, commercial and institutional markets and customers (i.e., all markets
other than residential), carpet, including carpet tile; without limiting the
foregoing, Executive shall be responsible for: (A) preparation of business
plans, budgets and forecasts, (B) development of strategies for pricing of
products to customers, (C) supervision of marketing and sale of products and
customer service, (D) development of overall strategy for such business, (E)
design and development of products, (F) development and maintenance of
relationships with principal customers and suppliers, (G) employment and
supervision of key executives and sales personnel, (H) development of plans for
expansion of such business, including expansion through merger, acquisition,
joint venture and other combinations and affiliations, and (I) supervision and
oversight of broadloom carpet manufacturing operations and quality control,
including "mass customization" production strategy and methods for reducing
waste in the production process.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
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(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
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(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Joyce D. LaValle
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. Binding Effect. This Agreement shall inure to the benefit of,
and be binding upon, the Company and its successors and assigns, and Executive
and her heirs and personal representatives. Any business entity or person
succeeding to all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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
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the remaining provisions shall constitute their agreement with respect to the
subject matter hereof, and all such remaining provisions shall continue in full
force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set her hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Joyce D. LaValle
-------------------------------------
Joyce D. LaValle
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EXHIBIT 10.18
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and JOYCE D. LAVALLE, a resident of the
State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, Executive is a key employee of the Company, or one or more of
its direct and indirect subsidiaries, and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
<PAGE>
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company (or any of its subsidiaries), or (ii) Executive's
conviction of a felony or other crime involving moral turpitude. A termination
of Executive for Cause based on clause (i) of the preceding sentence shall take
effect 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 (ii) above shall take effect immediately
upon the Company's delivery of the termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G, and any amounts paid under
paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
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(i) Salary. Executive will continue to receive her
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that Executive had previously earned from the Company (or its
subsidiaries) but which may not yet have been paid as of the date of
termination shall not be affected by this provision; provided, however, 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; and, provided further, 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 on the date Executive's employment is terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such other manner as the Company may agree). If
the terms of any benefit plan referred to in this subsection (c)(iii) do not
permit continued participation by Executive, the Company will arrange for other
coverage at its expense providing substantially similar benefits. The
coverages provided for in this subsection shall be applied against and reduce
the period for which COBRA benefits will be provided. If Executive is covered
by a split-dollar or similar life insurance program at the date of termination,
Executive shall have the option in Executive's sole discretion to have such
policy transferred to Executive upon termination, provided that, except as may
otherwise be provided in
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a separate agreement, the Company (or its subsidiary, as the case may be) is
paid for its interest (i.e., the cash surrender value) in the policy upon such
transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such
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restricted stock agreements as continuing to be actively employed by the
Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
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(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
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To Executive: Joyce D. LaValle
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 60 days after notification by the Board that Executive's claim has
been
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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 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(s). 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, however,
that the fee for the arbitrator(s) shall be shared equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set her hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Joyce D. LaValle
----------------------------------------
Joyce D. LaValle
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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
JOHN H. WALKER, a resident of the United Kingdom ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company or one or
more of its direct and indirect subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President
of the Company (and President and Chief Executive Officer of the Company's
principal operating subsidiaries in Europe and the Asia-Pacific region), 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 President, 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 Executive. Executive may be relocated, Executive's titles
and duties may be changed, and Executive may be promoted to a higher position
within the Company, but Executive will not be demoted or given lesser titles.
Executive acknowledges that if the Company determines to place management
responsibility for the Asia-Pacific region under another executive reporting to
the President or CEO of the Company (as was the case until 1996), such change
shall not, for purposes hereof, constitute a demotion or lessening of titles
for Executive.
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 President or 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
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4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or Executive) to
extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two 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 years;
and, provided further, the Company may, by notice to Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the term of
this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive
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shall also receive a prorated bonus for the year in which such termination
occurs equal to the Average Bonus multiplied by the number of days Executive
worked in such year divided by 365 days. Said prorated bonus shall be paid
within 30 days of the date of termination. Any bonus amounts that Executive had
previously earned from the Company (or its subsidiaries) but which may not yet
have been paid as of the date of termination shall not be affected by this
provision; provided, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes or cessation in such coverages
upon Executive's retirement, reaching age 65 or similar events). Any
additional coverages Executive had at termination, including dependent
coverage, will also be continued for the Continuation Period on the same terms,
to the extent permitted by the applicable policies or contracts. Any costs
Executive was paying for such coverages at the time of termination shall be
paid by Executive by separate check payable to the Company each month in
advance (or in such other manner as the Company may agree). If the terms of
any benefit plan referred to in this subsection do not permit continued
participation by Executive, then the Company will arrange for other coverage at
its expense providing substantially similar benefits. The coverages provided
for in this subsection shall be reduced to the extent that any statutory
benefits are payable (and in fact paid) during the Continuation Period. If
Executive is covered by a split- dollar or similar life insurance program as of
the date of termination, Executive shall have the option in Executive's sole
discretion to have such policy transferred to Executive upon termination,
provided that, except as may otherwise be provided in a separate agreement,
the Company (or its subsidiary, as the case may be) is paid for its interest
(i.e., the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company and applicable to Executive, the Interface
Flooring Systems, Inc. Retirement Plan and Trust, the Interface Europe Pension
Scheme, and the Interface, Inc. Savings and Investment Plan (the "Savings
Plan"). Executive's participation in such retirement plans shall continue for
the Continuation Period (at the end of which Executive will be considered to
have terminated employment within the meaning of the plans), and the
compensation payable to Executive under subsections (c)(i) and (ii) above shall
be treated (unless otherwise excluded under the terms of such retirement plans)
as compensation when computing benefits under the plans. For purposes of the
Savings Plan, 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. To the extent permissible under
applicable law, 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 Executive
and, if applicable,
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Executive's beneficiary, a supplemental benefit equal to the present value on
the date of termination of employment (calculated as provided in each plan) of
the excess of (A) the benefit Executive would have been paid under such plan if
Executive had continued to be covered for the Continuation Period (less any
amounts Executive 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 within 30
days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out- of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
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provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G (or such other amount as may be permitted without incurring
excise taxes or similar penalties under any similar law that may be in effect
or implemented in England and Wales and applicable to Executive). In the event
Executive's employment is terminated without "just cause" within 24 months
following the date of a "Change in Control" (as defined in the Change in
Control Agreement) or within six months prior to the date of a Change in
Control and is related to such Change in Control, the amounts payable to
Executive under clauses (i) and (ii) above shall be paid in single lump sum
payments determined in the same manner as provided in Sections 4(c)(i) and (ii)
of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
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6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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 laws of England and
Wales, while also acting in the best interests of the Company.
(d) Schedule. The Schedule attached hereto contains a written
statement of the particulars of Executive's employment as required by the
English Employment Rights Act (1996).
7. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
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(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - broadloom carpet, carpet tile and
broadloom carpet in six-foot and competitive widths for contract, commercial
and institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling and distributing, for contract, commercial and institutional
markets and customers (i.e., all markets other than residential), carpet,
including carpet tile; without limiting the foregoing, Executive shall be
responsible for: (A) preparation of business plans, budgets and forecasts, (B)
development of strategies for pricing of products to customers, (C) supervision
of marketing and sale of products and customer service, (D) development of
overall strategy for such business, (E) design and development of products, (F)
development and maintenance of relationships with principal customers and
suppliers, (G) employment and supervision of key executives and sales
personnel, (H) development of plans for expansion of such business, including
expansion through merger, acquisition, joint venture and other combinations and
affiliations, (I) supervision and oversight of carpet and carpet tile
manufacturing operations and quality control, including "mass customization"
production strategy and methods for reducing waste in the production process,
and (J) serving as spokesman for the business with its various constituencies,
including customers, employees and suppliers.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - England, Ireland, Scotland, France,
Netherlands, Germany, Spain, Italy, Switzerland, Belgium, Denmark, Norway,
Sweden, Finland, Russia, Greece, Czech Republic, Poland, Ukraine, Hungary,
Luxembourg, Turkey, South Africa, Saudi Arabia, Israel, Syria, Lebanon, Egypt,
the United Arab Emirates, Kuwait, India, Pakistan, China, Taiwan, Hong Kong,
Malaysia, Thailand, Singapore, Australia, Indonesia, Japan, Philippines and
South Korea, which is the geographic area where Executive performs Services for
Company and in which Company continues to conduct business. Executive has been
informed of and had an opportunity to discuss with Company the specific
territory in which Executive will perform Services. Executive acknowledges
that the market for Company Products is worldwide, and that the Territory is
the area in which Executive's provision of Services in violation of this
Agreement would cause harm to Company.
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(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for one
year after the termination for any reason of Executive's employment, or for
such longer period as Executive is receiving benefits under Section 5(c)(i) and
(ii) hereof, Executive will not solicit Customers for the purpose of providing
or selling any Products.
(e) Non-solicitation of Suppliers. During employment and for one
year after the termination for any reason of Executive's employment, or for
such longer period as Executive is receiving benefits under Section 5(c)(i) and
(ii) hereof, Executive will not solicit any Supplier for the purpose of
obtaining goods or services that Company obtained from that Supplier and that
are used in or relate to any Products.
(f) Non-solicitation of Company Employees. During employment and
for one year after the termination for any reason of Executive's employment, or
for such longer period as Executive is receiving benefits under Section 5(c)(i)
and (ii) hereof, Executive will not solicit for employment with another person
or entity, anyone who is, or was at any time during the year prior to such
termination of Executive's employment, a Company employee; provided, that this
restriction shall only apply with respect to employees for whom Executive had
management responsibilities, and to executive and sales personnel, whether or
not Executive had management responsibilities for such employees.
(g) Limitations on Post-Termination Competition. During
employment and for six months after the termination for any reason of
Executive's employment, or for such longer period as Executive is receiving
benefits under Section 5(c)(i) and (ii) hereof, Executive will not in
competition with the Company provide any Services within the Territory to any
person or entity developing, manufacturing, marketing, selling, distributing or
installing any Products, without the prior written approval of the Company.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this
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Agreement and, upon accepting any employment with another employer, provide
Company with such employer's name and a description of the services Executive
will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
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9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in
Atlanta, Georgia and hereby waives any objection Executive might otherwise have
to jurisdiction and venue in such courts in the event either court is requested
to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John H. Walker
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase of assets, or otherwise shall be
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bound by and shall adopt and assume this Agreement, and the Company shall
obtain the assumption of this Agreement by such successor.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest: /s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John H. Walker
------------------------------------------
John H. Walker
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SCHEDULE TO EMPLOYMENT AGREEMENT
Written Statement of Particulars of Employment for the purpose of Section 1 of
the Employment Rights Act of 1996 (England):
1. Commencement of continuity of employment
Executive's continuous period of employment began on November 13, 1972 (with
Heuga U.K. Ltd., a subsidiary of Heuga Holding, B.V., which was acquired by
Interface, Inc. in 1988).
2. Previous Employment
No employment of Executive with a previous employer counts as part of
Executive's continuous employment.
3. Job Title
The job title of Executive at commencement of the Agreement is Senior Vice
President of Interface, Inc., and President and Chief Executive Officer of
Interface Europe, Inc. and Interface Asia-Pacific, Inc.
4. Notice Period
See Sections 4 and 5 of the Agreement.
5. Remuneration
Executive's base salary shall be L.144,000 per annum, payable monthly in
arrears. In addition, Executive shall be entitled to the benefits set out in
Section 6 of the Agreement.
6. Hours of Work
The hours of work of Executive shall be such hours as may be requisite for the
proper discharge of his duties hereunder.
7. Holidays
Executive shall be entitled to 35 days (27 working plus 8 statutory) paid
holiday in each holiday year, which runs from January 1 to December 31.
8. Sick Pay
Other than as set out in the Agreement or otherwise communicated in writing to
Executive, there are no terms and conditions relating to incapacity for work
due to sickness or injury.
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9. Pensions
Other than as set out or referenced in the Agreement or otherwise communicated
in writing to Executive, there are no terms and conditions relating to
pensions. A contracting out certificate is not in force in respect of the
employment.
10. Grievance Procedure
Executive should refer any grievance he may have about his employment or about
any disciplinary decision relating to him to the President of Interface, Inc.
in writing.
11. Disciplinary Rules
There are no disciplinary rules relating to employment other than those which
are set out in the Agreement.
12. Place of Work
Executive's normal place of work is Berkhamsted, England.
<PAGE>
EXHIBIT 10.20
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and JOHN H. WALKER, a resident of the
United Kingdom ("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 (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, Executive is a key employee of the Company, or one or more of
its direct and indirect subsidiaries, and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
<PAGE>
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company (or any of its subsidiaries), or (ii) Executive's
conviction of a felony or other crime involving moral turpitude. A termination
of Executive for Cause based on clause (i) of the preceding sentence shall take
effect 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 (ii) above shall take effect immediately
upon the Company's delivery of the termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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(b) Termination Six Months Before or Two Years After Change in Control.
If a Change in Control occurs during the term of this Agreement and Executive's
employment is terminated (x) within 24 months following the date of the Change
in Control, or (y) within six months prior to the date of the Change in Control
and is related to such Change in Control, and in the case of either (x) or (y)
such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G (or such other amount as may be
permitted without incurring excise taxes or similar penalties under any similar
law that may be in effect or implemented in England and Wales and applicable to
Executive), and any amounts paid under paragraphs (i), (ii) and (iv) of this
Agreement shall be paid in the manner provided in such paragraphs.
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that Executive had previously earned from the Company (or its
subsidiaries) but which may not yet have been paid as of the date of
termination shall not be affected by this provision; provided, however, 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; and, provided further, 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 on the date Executive's employment is terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes or cessation in such coverages upon Executive's retirement or
reaching age 65), beginning on the date of such termination and ending on the
date 24 months from the date of such termination. Any additional coverages
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 Executive was paying for such
coverages at the time of termination shall be paid by Executive by separate
check payable to the Company each month in advance (or in such other manner as
the Company may agree). If the terms of any benefit plan referred to in this
subsection (c)(iii) do not permit continued participation by Executive, the
Company will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this subsection shall be
reduced to the extent that any statutory benefits are payable (and in fact
paid) during the 24-month period following Executive's termination. If
Executive is covered by a split-dollar or similar life insurance program at the
date of termination, Executive shall have the option in Executive's sole
discretion to have such policy transferred to Executive upon termination,
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provided that, except as may otherwise be provided in a separate agreement, the
Company (or its subsidiary, as the case may be) is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company and applicable to Executive, the Interface
Flooring Systems, Inc. Retirement Plan and Trust, the Interface Europe Pension
Scheme and the Interface, Inc. Savings Investment Plan and Trust (the "Savings
Plan"). Executive's participation in such retirement plans shall continue for
a period of 24 months from the date of termination of Executive's employment
(at which point Executive will be considered to have terminated employment
within the meaning of the plans), and the compensation payable to Executive
under subsections (c)(i) and (c)(ii) of this Section 4 shall be treated (unless
otherwise excluded under the terms of such retirement plans) as compensation
when computing benefits under such plans. For purposes of the Savings Plan,
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. To the extent permissible under applicable
law, 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 Executive and, if applicable,
Executive's beneficiary, a supplemental benefit equal to the present value on
the date of termination of employment (calculated as provided in each plan) of
the excess of (A) the benefit Executive would have been paid under such plan if
Executive had continued to be covered for the 24-month period (less any amounts
Executive 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 within 30 days of the
date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the
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benefits provided under, all restricted stock agreements issued under the Stock
Plans, in accordance with the terms of such agreements, and Executive shall be
considered for purposes of all such restricted stock agreements as continuing
to be actively employed by the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree to take
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action to provide, and to cooperate in providing, evidence to the Internal
Revenue Service (and, if applicable, the state revenue department) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
(e) Relevant Tax Law. In the event rules and regulations similar
to Code Section 280G are in effect or implemented in England and Wales and
applicable to Executive, the relevant provisions of this Agreement shall be
interpreted and construed, and the parties will enter into any necessary
modifications or amendments, to provide Executive with rights and benefits
comparable to those afforded to other similarly situated executives of the
Company who are subject to Code Section 280G.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John H. Walker
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects
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in whole or in part to fund the Company's obligations under this Agreement
pursuant to a trust arrangement or otherwise.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA), except to the extent otherwise expressly provided in this Agreement.
(e) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John H. Walker
---------------------------------------
John H. Walker
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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
JOHN L. PARTRIDGE, a resident of the United Kingdom ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company or one or
more of its direct and indirect subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President
of Interface Europe, Inc. and Interface Asia-Pacific, Inc. (as well as the
Company's principal operating subsidiaries in Europe and the Asia-Pacific
region), 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
President, Chief Executive Officer ("CEO") or Board of Directors of the Company
or the President of Interface Europe, Inc.; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
Executive. Executive may be relocated, Executive's titles and duties may be
changed, and Executive may be promoted to a higher position within the Company,
but Executive will not be demoted or given lesser titles. Executive
acknowledges that if the Company determines to place management responsibility
for the Asia-Pacific region under a senior executive team different than that
responsible for operations in Europe (as was the case until 1996), such change
shall not, for purposes hereof, constitute a demotion or lessening of titles
for Executive.
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 President or CEO of the Company, or President of
Interface Europe, 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest
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in no more than one percent of the outstanding stock or securities of any
competitor, the stock or securities of which are traded on a national stock
exchange of any country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or Executive) to
extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two 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 years;
and, provided further, the Company may, by notice to Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the term of
this Agreement shall be two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
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(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that Executive had
previously earned from the Company (or its subsidiaries) but which may not yet
have been paid as of the date of termination shall not be affected by this
provision; provided, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes or cessation in such coverages
upon Executive's retirement, reaching age 65 or similar events). Any
additional coverages Executive had at termination, including dependent
coverage, will also be continued for the Continuation Period on the same terms,
to the extent permitted by the applicable policies or contracts. Any costs
Executive was paying for such coverages at the time of termination shall be
paid by Executive by separate check payable to the Company each month in
advance (or in such other manner as the Company may agree). If the terms of
any benefit plan referred to in this subsection do not permit continued
participation by Executive, then the Company will arrange for other coverage at
its expense providing substantially similar benefits. The coverages provided
for in this subsection shall be reduced to the extent that any statutory
benefits are payable (and in fact paid) during the Continuation Period. If
Executive is covered by a split- dollar or similar life insurance program as of
the date of termination, Executive shall have the option in Executive's sole
discretion to have such policy transferred to Executive upon termination,
provided that, except as may otherwise be provided in a separate agreement,
the Company (or its subsidiary, as the case may be) is paid for its interest
(i.e., the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company and applicable to Executive, the Interface
Flooring Systems, Inc. Retirement Plan and Trust, the Interface Europe Pension
Scheme, and the Interface, Inc. Savings and Investment Plan (the "Savings
Plan"). Executive's participation in such retirement plans shall continue for
the Continuation Period (at the end of which Executive will be considered to
have terminated employment within the meaning of the plans), and the
compensation payable to Executive under subsections (c)(i) and (ii) above shall
be treated (unless otherwise excluded under the terms of such retirement plans)
as compensation when computing benefits under the plans. For purposes of the
Savings Plan, Executive will be credited with an amount equal to the Company's
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contribution to the plan, assuming Executive had participated in such plan at
the maximum permissible contribution level. To the extent permissible under
applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out- of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (as
defined in the Company's long-term disability plan or insurance policy),
Executive shall be entitled to no payment
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or compensation other than as provided by the Company's short and long-term
disability plans or, in the case of death, its life insurance payment policy in
effect for executives of Executive's level or pursuant to the terms of any
separate agreement concerning split-dollar or similar life insurance; provided,
however, Executive or Executive's estate, as the case may be, shall not by
operation of this provision forfeit any rights in which Executive is vested at
the time of Executive's disability or death (including, without limitation, the
rights and benefits provided under applicable retirement plans).
(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G (or such other amount as may be permitted without incurring
excise taxes or similar penalties under any similar law that may be in effect
or implemented in England and Wales and applicable to Executive). In the event
Executive's employment is terminated without "just cause" within 24 months
following the date of a "Change in Control" (as defined in the Change in
Control Agreement) or within six months prior to the date of a Change in
Control and is related to such Change in Control, the amounts payable to
Executive under clauses (i) and (ii) above shall be paid in single lump sum
payments determined in the same manner as provided in Sections 4(c)(i) and (ii)
of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
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(e) Survival of Provisions. 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 Section 7 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's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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 laws of England and
Wales, while also acting in the best interests of the Company.
(d) Schedule. The Schedule attached hereto contains a written
statement of the particulars of Executive's employment as required by the
English Employment Rights Act (1996).
7. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement
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may include information that is not a trade secret under applicable law, but
such information not constituting a trade secret shall be treated as
Confidential Information under this Agreement for only a two year period after
the expiration of this Agreement or termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
(iv) "Products" - broadloom carpet, carpet tile and
broadloom carpet in six-foot and competitive widths for contract, commercial
and institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the general
operations of the business of designing, developing, manufacturing, purchasing
for resale, marketing, selling and distributing, for contract, commercial and
institutional markets and customers (i.e., all markets other than residential),
carpet, including carpet tile; without limiting the foregoing, Executive shall
be responsible for: (a) purchasing, logistics, administration, manufacturing,
quality control, inventory control, customer service, waste minimization and
"mass customization" of production, (b) strategies for expansion through
acquisitions, joint ventures, alliances and other combinations and
affiliations, and (c) new product design and development.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - England, Ireland, Scotland, France,
Netherlands, Germany, Spain, Italy, Switzerland, Belgium, Denmark, Norway,
Sweden, Finland, Russia, Greece, Czech Republic, Poland, Ukraine, Hungary,
Luxembourg, Turkey, South Africa, Saudi Arabia, Israel, Syria, Lebanon, Egypt,
the United Arab Emirates, Kuwait, India, Pakistan, China, Taiwan, Hong Kong,
Malaysia, Thailand, Singapore, Australia, Indonesia, Japan, Philippines and
South Korea, which is the geographic area where Executive performs Services for
Company and in which Company continues to conduct business. Executive has been
informed of and had an opportunity to discuss with Company the specific
territory in which Executive will perform Services. Executive acknowledges
that the market for Company Products is worldwide, and that the Territory is
the area in which Executive's provision of Services in violation of this
Agreement would cause harm to Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for
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Company, and will not disclose during or after Executive's employment,
Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
(d) Non-solicitation of Customers. During employment and for one
year after the termination for any reason of Executive's employment, or for
such longer period as Executive is receiving benefits under Section 5(c)(i) and
(ii) hereof, Executive will not solicit Customers for the purpose of providing
or selling any Products.
(e) Non-solicitation of Suppliers. During employment and for one
year after the termination for any reason of Executive's employment, or for
such longer period as Executive is receiving benefits under Section 5(c)(i) and
(ii) hereof, Executive will not solicit any Supplier for the purpose of
obtaining goods or services that Company obtained from that Supplier and that
are used in or relate to any Products.
(f) Non-solicitation of Company Employees. During employment and
for one year after the termination for any reason of Executive's employment, or
for such longer period as Executive is receiving benefits under Section 5(c)(i)
and (ii) hereof, Executive will not solicit for employment with another person
or entity, anyone who is, or was at any time during the year prior to such
termination of Executive's employment, a Company employee; provided, that this
restriction shall only apply with respect to employees for whom Executive had
management responsibilities, and to executive and sales personnel, whether or
not Executive had management responsibilities for such employees.
(g) Limitations on Post-Termination Competition. During
employment and for six months after the termination for any reason of
Executive's employment, or for such longer period as Executive is receiving
benefits under Section 5(c)(i) and (ii) hereof, Executive will not in
competition with the Company provide any Services within the Territory to any
person or entity developing, manufacturing, marketing, selling, distributing or
installing any Products, without the prior written approval of the Company.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement, and upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
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(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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
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America, without regard to rules relating to the conflict of laws. Executive
hereby consents to the exclusive jurisdiction of the Superior Court of Cobb
County, Georgia and the U.S. District Court in Atlanta, Georgia and hereby
waives any objection Executive might otherwise have to jurisdiction and venue
in such courts in the event either court is requested to resolve a dispute
between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John L. Partridge
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
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13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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 continue in full force and
effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John L. Partridge
-------------------------------------
John L. Partridge
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SCHEDULE TO EMPLOYMENT AGREEMENT
Written Statement of Particulars of Employment for the purpose of Section 1 of
the Employment Rights Act of 1996 (England):
1. Commencement of continuity of employment
Executive's continuous period of employment began on October 1, 1981 (with
Heuga U.K. Ltd., a subsidiary of Heuga Holding, B.V., which was acquired by
Interface, Inc. in 1988).
2. Previous Employment
No employment of Executive with a previous employer counts as part of
Executive's continuous employment.
3. Job Title
The job title of Executive at commencement of the Agreement is Senior Vice
President of Interface Europe, Inc. and Interface Asia-Pacific, Inc.
4. Notice Period
See Sections 4 and 5 of the Agreement.
5. Remuneration
Executive's base salary shall be L.98,000 per annum, payable monthly in
arrears. In addition, Executive shall be entitled to the benefits set out in
Section 6 of the Agreement.
6. Hours of Work
The hours of work of Executive shall be such hours as may be requisite for the
proper discharge of his duties hereunder.
7. Holidays
Executive shall be entitled to 35 days (27 working plus 8 statutory) paid
holiday in each holiday year, which runs from January 1 to December 31.
8. Sick Pay
Other than as set out in the Agreement or otherwise communicated in writing to
Executive, there are no terms and conditions relating to incapacity for work
due to sickness or injury.
<PAGE>
9. Pensions
Other than as set out or referenced in the Agreement or otherwise communicated
in writing to Executive, there are no terms and conditions relating to
pensions. A contracting out certificate is not in force in respect of the
employment.
10. Grievance Procedure
Executive should refer any grievance he may have about his employment or about
any disciplinary decision relating to him to the President of Interface, Inc.
in writing.
11. Disciplinary Rules
There are no disciplinary rules relating to employment other than those which
are set out in the Agreement.
12. Place of Work
Executive's normal place of work is Shelf, England.
<PAGE>
EXHIBIT 10.22
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and JOHN L. PARTRIDGE, a resident of the
United Kingdom ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, Executive is a key employee of the Company, or one or more of
its direct and indirect subsidiaries, and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non- compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
<PAGE>
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company (or any of its subsidiaries), or (ii) Executive's
conviction of a felony or other crime involving moral turpitude. A termination
of Executive for Cause based on clause (i) of the preceding sentence shall take
effect 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 (ii) above shall take effect immediately
upon the Company's delivery of the termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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<PAGE>
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G (or such other amount as may be
permitted without incurring excise taxes or similar penalties under any similar
law that may be in effect or implemented in England and Wales and applicable to
Executive), and any amounts paid under paragraphs (i), (ii) and (iv) of this
Agreement shall be paid in the manner provided in such paragraphs.
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that Executive had previously earned from the Company (or its
subsidiaries) but which may not yet have been paid as of the date of
termination shall not be affected by this provision; provided, however, 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; and, provided further, 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 on the date Executive's employment is terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes or cessation in such coverages upon Executive's retirement or
reaching age 65), beginning on the date of such termination and ending on the
date 24 months from the date of such termination. Any additional coverages
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 Executive was paying for such
coverages at the time of termination shall be paid by Executive by separate
check payable to the Company each month in advance (or in such other manner as
the Company may agree). If the terms of any benefit plan referred to in this
subsection (c)(iii) do not permit continued participation by Executive, the
Company will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this subsection shall be
reduced to the extent that any statutory benefits are payable (and in fact
paid) during the 24-month period following Executive's termination. If
Executive is covered by a split-dollar or similar life insurance program at the
date of termination, Executive shall have the option in Executive's sole
discretion to have such policy transferred to Executive upon termination,
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<PAGE>
provided that, except as may otherwise be provided in a separate agreement, the
Company (or its subsidiary, as the case may be) is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company and applicable to Executive, the Interface
Flooring Systems, Inc. Retirement Plan and Trust, the Interface Europe Pension
Scheme and the Interface, Inc. Savings Investment Plan and Trust (the "Savings
Plan"). Executive's participation in such retirement plans shall continue for
a period of 24 months from the date of termination of Executive's employment
(at which point Executive will be considered to have terminated employment
within the meaning of the plans), and the compensation payable to Executive
under subsections (c)(i) and (c)(ii) of this Section 4 shall be treated (unless
otherwise excluded under the terms of such retirement plans) as compensation
when computing benefits under such plans. For purposes of the Savings Plan,
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. To the extent permissible under applicable
law, 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 Executive and, if applicable,
Executive's beneficiary, a supplemental benefit equal to the present value on
the date of termination of employment (calculated as provided in each plan) of
the excess of (A) the benefit Executive would have been paid under such plan if
Executive had continued to be covered for the 24-month period (less any amounts
Executive 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 within 30 days of the
date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the
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benefits provided under, all restricted stock agreements issued under the Stock
Plans, in accordance with the terms of such agreements, and Executive shall be
considered for purposes of all such restricted stock agreements as continuing
to be actively employed by the Company after such termination.
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree to take
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action to provide, and to cooperate in providing, evidence to the Internal
Revenue Service (and, if applicable, the state revenue department) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section 5, either (i)
the amounts paid to Executive unintentionally constituted Excess Severance
Payments and triggered the Excise Tax, even though the payments to Executive
were reduced in an effort to avoid such result; or (ii) the amounts paid to
Executive were reduced by more than was necessary to avoid triggering the
Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
(e) Relevant Tax Law. In the event rules and regulations similar
to Code Section 280G are in effect or implemented in England and Wales and
applicable to Executive, the relevant provisions of this Agreement shall be
interpreted and construed, and the parties will enter into any necessary
modifications or amendments, to provide Executive with rights and benefits
comparable to those afforded to other similarly situated executives of the
Company who are subject to Code Section 280G.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John L. Partridge
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects
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in whole or in part to fund the Company's obligations under this Agreement
pursuant to a trust arrangement or otherwise.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA), except to the extent otherwise expressly provided in this Agreement.
(f) 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 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 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) Other Benefits. Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John L. Partridge
----------------------------------------
John L. Partridge
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Exhibit 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
JOHN R. WELLS, a resident of LaGrange, Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as Vice President of the
Company (and President and Chief Executive Officer of Interface Flooring
Systems, Inc.), and shall perform such duties and functions for the Company and
its subsidiaries and affiliates as shall be specified from time to time by the
President, Chief Executive Officer ("CEO") or Board of Directors of the Company
or the President of Interface Americas, Inc.; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
Executive. Executive may be relocated, Executive's titles and duties may be
changed, and Executive may be promoted to a higher position within the Company,
but Executive 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 President or CEO of the Company, or President of
Interface Americas, 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by
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either the Company or Executive) to extend each day for an additional day such
that the remaining term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice
to Executive, cause this Agreement to cease to extend automatically and, upon
such notice, the term of this Agreement shall be two years following such
notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365
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days. Said prorated bonus shall be paid within 30 days of the date of
termination. Any bonus amounts that 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, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive would have been required to
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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 within 30 days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out-of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
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(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
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(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the President, CEO or Board of Directors (or
Committee of the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
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(iv) "Products" - broadloom carpet, carpet tile and
broadloom carpet in six-foot and competitive widths for contract, commercial
and institutional markets and customers (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, the conduct of the
business of designing, developing, manufacturing, purchasing for resale,
marketing, selling, distributing, installing, maintaining and reclaiming, for
contract, commercial and institutional markets and customers (i.e., all markets
other than residential), carpet, including carpet tile; without limiting the
foregoing, Executive shall be responsible for: (A) preparation of business
plans, budgets and forecasts, (B) development of strategies for pricing of
products to customers, (C) supervision of marketing and sale of products and
customer service, (D) development of overall strategy for such business, (E)
design and development of products, (F) development and maintenance of
relationships with principal customers and suppliers, (G) employment and
supervision of key executives and sales personnel, (H) development of plans for
expansion of such business, including expansion through merger, acquisition,
joint venture and other combinations and affiliations, and (I) supervision and
oversight of carpet and carpet tile manufacturing operations and quality
control, including "mass customization" production strategy and methods for
reducing waste in the production process. Executive acknowledges that he has
been informed of and had an opportunity to discuss with Company the specific
activities Executive will perform as Services, and that Executive understands
the scope of the activities constituting Services.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
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(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
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(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John R. Wells
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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
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the remaining provisions shall constitute their agreement with respect to the
subject matter hereof, and all such remaining provisions shall continue in full
force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
-----------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John R. Wells
------------------------------------------
John R. Wells
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EXHIBIT 10.24
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and JOHN R. WELLS, a resident of
LaGrange, Georgia ("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 (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non-compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
<PAGE>
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
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(b) Termination Six Months Before or Two Years After
Change in Control. If a Change in Control occurs during the term of this
Agreement and Executive's employment is terminated (x) within 24 months
following the date of the Change in Control, or (y) within six months prior to
the date of the Change in Control and is related to such Change in Control, and
in the case of either (x) or (y) such termination is a result of Involuntary
Termination or Voluntary Termination, as defined below, then the benefits
described in subsection (c) below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company-required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G, and any amounts paid under
paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
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(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such other manner as the Company may agree). If
the terms of any benefit plan referred to in this subsection (c)(iii) do not
permit continued participation by Executive, the Company will arrange for other
coverage at its expense providing substantially similar benefits. The
coverages provided for in this subsection shall be applied against and reduce
the period for which COBRA benefits will be provided. If Executive is covered
by a split-dollar or similar life insurance program at the date of termination,
Executive shall have the option in Executive's sole discretion to have such
policy transferred to Executive upon termination, provided that, except as may
otherwise be provided in a separate agreement, the Company is paid for its
interest (i.e., the cash surrender value) in the policy upon such transfer.
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(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
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5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this Section
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5, either (i) the amounts paid to Executive unintentionally constituted Excess
Severance Payments and triggered the Excise Tax, even though the payments to
Executive were reduced in an effort to avoid such result; or (ii) the amounts
paid to Executive were reduced by more than was necessary to avoid triggering
the Excise Tax, then the parties shall make the applicable correction that will
achieve the goal described in Section 5(c) hereof. In the event the error
referred to in clause (i) hereof occurs, Executive shall repay to the Company,
within 10 days after the error is discovered, the amount necessary to avoid the
Excise Tax; provided, however, that if Executive, based on advice from Tax
Counsel and Executive's own tax advisor, determines that the return of such
amounts will not serve to eliminate the Excess Severance Payments and the
Excise Tax, the Company then shall be obligated to pay to Executive, within 10
days after Executive notifies the Company of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Sections 5(a) and (b) hereof.
In the event the error referred to in clause (ii) hereof occurs, the Company
shall pay to Executive, within 10 days after the error is discovered, the
maximum amount of the compensation and benefits that were reduced pursuant to
the terms of Sections 5(a) and (b) hereof that Executive may receive without
triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: John R. Wells
at the last address and fax number
shown on the records of the Company
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Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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
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having jurisdiction. In the event 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) 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 Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
-----------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ John R. Wells
------------------------------------------
John R. Wells
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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of April, 1997, by and between INTERFACE, INC., a corporation
organized under the laws of the State of Georgia, U.S.A. (the "Company"), and
MICHAEL D. BERTOLUCCI, a resident of the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the parties desire to enter into an employment agreement
setting forth the terms of Executive's employment with the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration
(including, without limitation, certain stock option and restricted stock
awards granted to Executive subject to Executive's entering into this
Agreement), 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 Senior Vice President
of the Company (and President of Interface Research Corporation), 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 Executive. Executive may be relocated, Executive's titles and duties may be
changed, and Executive may be promoted to a higher position within the Company,
but Executive 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 enterprise without
the prior written consent of the Company. Without limiting the foregoing,
Executive shall not serve as a principal, partner, employee, officer or
director of, or consultant to, any other business or entity conducting business
for profit without the prior written approval of the Company. In addition,
under no circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, Executive may invest in no more
than one percent of the outstanding stock or securities of any competitor, the
stock or securities of which are traded on a national stock exchange of any
country.
4. Term. The duration of this Agreement (the "term") shall be
for a rolling, two-year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or Executive) to
extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two years; provided, however, that on
Executive's 63rd
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birthday, this Agreement shall cease to extend automatically and, on such date,
the remaining term of this Agreement shall be two years; and, provided further,
the Company may, by notice to Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the term of this Agreement shall be
two years following such notice.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Voluntary Termination. Executive may voluntarily terminate
his employment hereunder at any time, effective 90 days after delivery to the
Company of Executive's signed, written resignation; the Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period.
(b) Termination by Company. Subject to the terms of Sections 5(c)
and (d) below, the Company may terminate Executive's employment hereunder, in
its sole discretion, whether with or without "just cause", at any time upon
written notice to Executive.
(c) Termination Without Just Cause. If, prior to the end of the
term of this Agreement, the Company terminates Executive's employment without
"just cause" (as defined in subsection (d) below), Executive shall be entitled
to receive, as damages payable as a result of, and arising from, the Company's
breach of this Agreement, the compensation and benefits set forth in clauses
(i) through (v) below. The time periods for which compensation and benefits
will be provided with respect to (i) through (iv) below is referred to herein
as the "Continuation Period", which means the time period remaining from the
date of Executive's termination of employment to the end of the remaining term
of this Agreement as provided in Section 4 above. Except to the extent
provided in clause (ix) hereof, Executive shall have no duty to mitigate any of
the damages payable hereunder. The fact that Executive is eligible for
retirement, including early retirement, under applicable retirement plans at
the time of Executive's termination shall not make Executive ineligible to
receive benefits under this Section 5(c).
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for the
Continuation Period in the same manner as it was being paid as of the date of
termination. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the Continuation Period in an amount for
each calendar month during such period equal to one-twelfth of the average of
the bonuses paid to Executive for the two calendar years immediately preceding
the year in which such termination occurs ("Average Bonus"). Executive shall
also receive a prorated bonus for the year in which such termination occurs
equal to the Average Bonus multiplied by the number of days Executive worked in
such year divided by 365 days. Said prorated bonus shall be paid within 30
days of the date of termination. Any bonus amounts that Executive had
previously earned from the Company but which may not yet have been
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paid as of the date of termination shall not be affected by this provision;
provided, however, 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) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued for the Continuation Period by the Company at its expense at the
same level and in the same manner as if Executive's employment had not
terminated (subject to the customary changes in such coverages upon Executive's
retirement, reaching age 65 or similar events). Any additional coverages
Executive had at termination, including dependent coverage, will also be
continued for the Continuation Period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance (or in such
other manner as the Company may agree). If the terms of any benefit plan
referred to in this subsection do not permit continued participation by
Executive, then the Company will arrange for other coverage at its expense
providing substantially similar benefits. The coverages provided for in this
subsection shall be applied against and reduce the period for which COBRA
benefits will be provided. If Executive is covered by a split-dollar or
similar life insurance program as of the date of termination, Executive shall
have the option in Executive's sole discretion to have such policy transferred
to Executive upon termination, provided that, except as may otherwise be
provided in a separate agreement, the Company is paid for its interest (i.e.,
the cash surrender value) in the policy upon such transfer.
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings and Investment Plan
(the "Savings Plan"). Executive's participation in such retirement plans shall
continue for the Continuation Period (at the end of which Executive will be
considered to have terminated employment within the meaning of the plans), and
the compensation payable to Executive under subsections (c)(i) and (ii) above
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under the plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
Continuation Period (less any amounts Executive would have been required to
contribute) and been treated as fully vested, over (B) the benefit actually
payable under such plan.
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The Company shall pay such additional benefits (if any) in a lump sum within 30
days of the date of termination.
(v) Stock Awards. As of Executive's date of termination,
all outstanding stock options granted to Executive under the Interface, Inc.
Omnibus Stock Incentive Plan, 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 thus immediately exercisable. To the extent inconsistent with this
immediate vesting requirement, the provisions of this clause (v) shall
constitute an amendment of Executive's stock option agreements under such stock
plans. In addition, but only to the extent expressly provided in any
restricted stock agreement associated with the Interface, Inc. Omnibus Stock
Incentive Plan, restrictions on all shares of restricted stock (and other
performance shares, performance units or deferred shares) awarded to Executive
under said plan shall lapse, and the affected shares shall become 100% vested.
(vi) Cessation Upon Death. The continuation benefits
payable or to be provided under clauses (i), (ii), (iii) and (iv) of this
Section 5(c) shall cease in the event of Executive's death. (The foregoing
shall not operate or be construed to negate the benefits payable to Executive
and Executive's estate under the plans and policies referenced in clauses (iii)
and (iv) in the event of Executive's death during the Continuation Period.)
(vii) Additional Consideration. To be entitled to receive
the foregoing compensation, Executive shall sign whatever additional release of
claims, confidentiality agreements and other documents the 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 Executive's reasonable best efforts to
providing assistance requested by the Company. Such assistance shall not
require Executive to be active in the Company's day-to-day activities or engage
in any substantial travel, and Executive shall be reimbursed for all reasonable
and necessary out-of-pocket business expenses incurred in providing such
assistance.
(viii) Effect of Other Termination Events. If Executive
voluntarily resigns from employment or is terminated for just cause prior to
the end of the term of this Agreement, then Executive shall be entitled to no
payment or compensation whatsoever from the Company under this Agreement, other
than as may be due Executive through Executive's last day of employment. If
Executive's employment is terminated due to Executive's disability or death (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 plans or, in the case
of death, its life insurance payment policy in effect for executives of
Executive's level or pursuant to the terms of any separate agreement concerning
split-dollar or similar life insurance; provided, however, Executive or
Executive's estate, as the case may be, shall not by operation of this
provision forfeit any rights in which Executive is vested at the time of
Executive's disability or death (including, without limitation, the rights and
benefits provided under applicable retirement plans).
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(ix) Change in Control. If Executive becomes entitled to
compensation and benefits under this Section 5(c) and such payments would be
considered to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to offer to
perform the duties and job Executive 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 under Code Section 280G) by reducing the amount of such severance
payments Executive is entitled to receive by any compensation and benefits
Executive earns from subsequent employment (but Executive shall not be required
to seek such employment) during the Continuation Period. If the compensation
and benefits payable to Executive under this Section 5(c) are reduced by
mitigation, Executive shall continue to be entitled to receive in the aggregate
under this Agreement and the Change in Control Agreement between Executive and
Company of even date herewith, an amount of compensation and benefits at least
equal to 2.99 times Executive's "Base Amount" as defined in Internal Revenue
Code Section 280G. In the event Executive's employment is terminated without
"just cause" within 24 months following the date of a "Change in Control" (as
defined in the Change in Control Agreement) or within six months prior to the
date of a Change in Control and is related to such Change in Control, the
amounts payable to Executive under clauses (i) and (ii) above shall be paid in
single lump sum payments determined in the same manner as provided in Sections
4(c)(i) and (ii) of the Change in Control Agreement.
(d) Just Cause. 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 "just cause"
shall mean: (i) Executive's fraud, dishonesty, gross negligence, or willful
misconduct with respect to business affairs of the Company (including its
subsidiaries and affiliated companies), (ii) Executive's refusal or repeated
failure to follow the established lawful policies of the Company applicable to
persons occupying the same or similar positions, (iii) Executive's material
breach of this Agreement, or (iv) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for just cause
based on clause (i), (ii) or (iii) of the preceding sentence shall take effect
30 days after Executive receives from the Company written notice of intent to
terminate and the Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or circumstances
constituting just cause; provided, however, 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).
(e) Survival of Provisions. 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 Section 7 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
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(a) Continuity. Executive's salary, current perquisites
(including, but not limited to, company car) and bonus opportunity (currently
expressed as a percentage of Executive's base salary) may be increased from
time to time as determined by the CEO or Board of Directors (or Committee of
the Board), but shall not be reduced or eliminated.
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as
Executive may be entitled to receive in accordance with the established plans
and policies of the Company, as in effect from time to time.
(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. Restrictive Covenants.
(a) Definitions. As used in this Section 7, the following terms
shall have the meanings ascribed to such terms as set forth below.
(i) "Company" - Interface, Inc. and its direct and
indirect subsidiaries and affiliated entities throughout the world.
(ii) "Confidential Information" - information relating to
Company's customers, operations, finances, and business in any form that
derives value from not being generally known to other persons or entities,
including, but not limited to, technical or nontechnical data, formulas,
patterns (including future carpet and fabric patterns), customer purchasing
practices and preferences, compilations (including compilations of customer
information), programs (including computer programs and models), devices
(including carpet and fabric manufacturing equipment), methods (including
aesthetic and functional design and manufacturing methods), techniques
(including style and design technology and plans), drawings (including product
or equipment drawings), processes, financial data (including sales forecasts,
sales histories, business plans, budgets and other forecasts), or lists of
actual or potential customers or suppliers (including identifying information
about those customers), whether or not reduced to writing. Confidential
Information subject to this Agreement may include information that is not a
trade secret under applicable law, but such information not constituting a
trade secret shall be treated as Confidential Information under this Agreement
for only a two year period after the expiration of this Agreement or
termination of Executive's employment.
(iii) "Customers" - customers of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) solicited or serviced or (B) about
whom Executive had Confidential Information. The parties acknowledge that a
two-year period for defining Customers (as well as "Suppliers", below) is
reasonable based on Company's typical sales cycle, budgetary requirements and
procurement procedures.
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(iv) "Products" - broadloom carpet, carpet tile, broadloom
carpet in six-foot and competitive widths; specialty interior fabrics for open
plan furniture systems, furniture upholstery, wall and ceiling coverings and
window treatments; and chemical products, specialty surfaces and interior
architectural products (including raised/access floors), all for contract,
commercial and institutional markets (i.e., all markets other than
residential).
(v) "Services" - the services Executive shall provide as
a Company executive and that Executive shall be prohibited from providing in
competition with Company in accordance with the terms of this Agreement, which
are to manage and supervise, and to have responsibility for, (A) research and
development of technologies, products, materials, chemicals and manufacturing
processes relating to broadloom carpet, carpet tile, broadloom carpet in
six-foot and competitive widths; specialty interior fabrics for open plan
furniture systems, furniture upholstery, wall and ceiling coverings and window
treatments; and chemical products, specialty surfaces and interior
architectural products (including raised/access floors), all for contract,
commercial and institutional markets (i.e., all markets other than
residential), (B) licensing of proprietary technologies to manufacturers of
non-competitive interior products and finishings, and (C) development of
methods, procedures and other products that enhance and improve the
environmental sustainability of the foregoing products and of the manufacturing
operations and processes utilized with respect to such products.
(vi) "Supplier" - a supplier of Company that Executive,
during the two year period before the expiration of this Agreement or
termination of Executive's employment, (A) had contact with on behalf of
Company or (B) about whom Executive had Confidential Information.
(vii) "Territory" - North America, which is the geographic
area where Executive performs Services for Company and in which Company
continues to conduct business. Executive has been informed of and had an
opportunity to discuss with Company the specific territory in which Executive
will perform Services. Executive acknowledges that the market for Company
Products is worldwide, and that the Territory is the area in which Executive's
provision of Services in violation of this Agreement would cause harm to
Company.
(b) Non-disclosure and Restricted Use. Executive shall use best
efforts to protect Confidential Information. Furthermore, Executive will not
use, except in connection with work for Company, and will not disclose during
or after Executive's employment, Company's Confidential Information.
(c) Return of Materials. Upon the expiration of this Agreement or
termination for any reason of Executive's employment, or at any time upon
Company's request, Executive will deliver promptly to Company all materials,
documents, plans, records, notes or other papers and any copies in Executive's
possession or control relating in any way to Company's business, which at all
times shall be the property of Company.
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(d) Non-solicitation of Customers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit Customers for the purpose of providing or selling any
Products.
(e) Non-solicitation of Suppliers. During employment and for two
years after the termination for any reason of Executive's employment, Executive
will not solicit any Supplier for the purpose of obtaining goods or services
that Company obtained from that Supplier and that are used in or relate to any
Products.
(f) Non-solicitation of Company Employees. During employment and
for two years after the termination for any reason of Executive's employment,
Executive will not solicit for employment with another person or entity, anyone
who is, or was at any time during the year prior to such termination of
Executive's employment, a Company employee.
(g) Limitations on Post-Termination Competition. During
employment and for two years after the termination for any reason of
Executive's employment, Executive will not provide any Services within the
Territory to any person or entity developing, manufacturing, marketing,
selling, distributing or installing any Products.
(h) Disparagement. Executive shall not at any time make false or
misleading statements about Company, including its products, management,
employees, customers and suppliers.
(i) Future Employment Opportunities. At any time before, and for
two years after, the termination for any reason of Executive's employment,
Executive shall, before accepting employment with another employer, provide
such prospective employer with a copy of this Agreement and, upon accepting any
employment with another employer, provide Company with such employer's name and
a description of the services Executive will provide to such employer.
(j) Work For Hire Acknowledgment; Assignment. Executive
acknowledges that Executive's work on and contributions to documents, programs,
and other expressions in any tangible medium (collectively, "Works") are within
the scope of Executive's employment and part of Executive's duties and
responsibilities. Executive's work on and contributions to the Works will be
rendered and made by Executive for, at the instigation of, and under the
overall direction of, Company, and are and at all times shall be regarded,
together with the Works, as "work made for hire" as that term is used in the
United States Copyright Laws. Without limiting this acknowledgment, Executive
assigns, grants, and delivers exclusively to Company all rights, titles, and
interests in and to any such Works, and all copies and versions, including all
copyrights and renewals. Executive will execute and deliver to Company, its
successors and assigns, any assignments and documents Company requests for the
purpose of establishing, evidencing, and enforcing or defending its complete,
exclusive, perpetual and worldwide ownership of all rights, titles and
interests of every kind and nature, including all copyrights, in and to the
Works, and Executive constitutes and appoints Company as Executive's agent to
execute and deliver any assignments or documents Executive fails or refuses
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable.
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(k) Inventions, Ideas and Patents. Executive shall disclose
promptly to Company (which shall receive it in confidence), and only to
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by Company or within six months
of the date of expiration of this Agreement or termination of employment.
Executive assigns to Company any such invention or idea in any way connected
with Executive's employment with Company or related to Company's business,
research or development, or demonstrably anticipated research or development,
and will cooperate with Company and sign all documents deemed necessary by
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm Company's exclusive ownership of all
rights in such inventions, ideas and patents. Executive irrevocably appoints
Company as Executive's agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this
power and agency being coupled with an interest and being irrevocable. This
constitutes Company's written notification that this assignment does not apply
to an invention for which no equipment, supplies, facility or trade secret
information of Company was used and which was developed entirely on Executive's
own time, unless (i) the invention relates (A) directly to the business of
Company, or (B) to Company's actual or demonstrably anticipated research or
development, or (ii) the invention results from any work performed by Executive
for Company.
8. Injunctive Relief. Executive acknowledges that any breach of
the terms of Section 7 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 the Company.
9. 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 exclusive
jurisdiction of the Superior Court of Cobb County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection Executive
might otherwise have to jurisdiction and venue in such courts in the event
either court is requested to resolve a dispute between the parties.
10. 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
postage prepaid, to the parties at the following addresses:
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To the Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Michael D. Bertolucci
at the last address and fax number
shown on the records of the Company
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
11. 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.
12. 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 all or substantially all of the business of the Company by stock
purchase, merger, consolidation, purchase 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.
13. Entire Agreement. This Agreement 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, which makes specific
reference to this Agreement.
14. Severability. The Company's various rights and remedies
referenced in this Agreement are cumulative and nonexclusive of one another,
and Executive's covenants and agreements contained herein are severable and
independent of one another. The existence of any claim by Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by the Company of any or all of 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
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the remaining provisions shall constitute their agreement with respect to the
subject matter hereof, and all such remaining provisions shall continue in full
force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers, and Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
----------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Michael D. Bertolucci
-------------------------------------
Michael D. Bertolucci
11
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EXHIBIT 10.26
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 1997, by and between INTERFACE, INC.,
a Georgia corporation (the "Company"), and MICHAEL D. BERTOLUCCI, a resident of
the State of Georgia ("Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control (as defined in Section 3(c) below) of the Company, and to
induce its key employees to remain employed by the Company; and
WHEREAS, 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 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, and for other good and valuable
consideration (including, without limitation, certain stock option and
restricted stock awards granted to Executive subject to Executive's entering
into this Agreement and an Employment Agreement containing non-compete
covenants), the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. 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 Section 3(c)
below. Immediately upon such an occurrence, all of the provisions hereof shall
become operative.
2. Term of Agreement. The duration of this Agreement (the
"term") shall be for a rolling, two-year term commencing on the date hereof,
and shall be deemed automatically (without further action by either the Company
or Executive) to extend each day for an additional day such that the remaining
term of the Agreement shall continue to be two 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 years; and, provided further, the Company may, by notice to Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the term of this Agreement shall be two years following such notice.
<PAGE>
3. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings ascribed to them
below.
(a) Board or Board of Directors. The terms "Board" and "Board of
Directors" shall mean the Board of Directors of Interface, Inc., or its
successor.
(b) Cause. The term "Cause" as used herein shall mean: (i) an act
that constitutes, on the part of Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's conviction of a felony or other
crime involving moral turpitude. A termination of Executive for Cause based on
clause (i) of the preceding sentence shall take effect 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 (ii)
above shall take effect immediately upon the Company's delivery of the
termination notice.
(c) Change in Control. The term "Change in Control" as used
herein shall mean and be deemed to occur on the earliest of, and upon any
subsequent occurrence of, the following:
(i) during such period as the holders of the Company's Class
B common stock are entitled to elect a majority of the Company's Board of
Directors, the Permitted Holders (defined below) shall at any time fail to be
the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934) of a majority of the issued and outstanding
shares of the Company's Class B common stock;
(ii) at any time during which the holders of the Company's
Class B common stock have ceased to be entitled to elect a majority of the
Company's Board of Directors, the acquisition by any "person", entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, and rules promulgated thereunder)
of more than 30 percent of the Company's outstanding capital stock entitled to
vote for the election of directors ("Voting Stock");
(iii) the effective time of (A) a merger, consolidation or
other business combination of the Company with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Company
immediately prior to such merger or consolidation hold less than 70 percent of
the Voting Stock of the surviving or resulting corporation, or (B) a transfer
of all or substantially all of the property or assets of the Company other
than to an entity of which the Company owns at least 70 percent of the Voting
Stock, or (C) a plan of complete liquidation of the Company; and
(iv) the election to the Board of Directors of the Company,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board of Directors, or, if he is not then serving, of the incumbent
Board of Directors of the Company, of the lesser of (A)
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four directors, or (B) directors constituting a majority of the number of
directors of the Company then in office.
(d) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Disability. The term "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity, to substantially
perform Executive's duties for the Company on a full-time basis for a
continuous period of six months.
(f) 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.
(g) 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.
(h) Permitted Holders. The term "Permitted Holders" shall mean
the individuals listed on Schedule 10.11 to the Amended and Restated Credit
Agreement dated June 30, 1995, by and among the Company, certain of its
subsidiaries, SunTrust Bank and the other banks parties thereto (regardless of
whether said agreement is terminated or continues in force and effect),
provided that, for purposes of this definition, the reference to each such
individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts created by such
individual for the benefit of members of such individual's immediate family.
(i) Present Value. The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
(j) Reasonable Compensation. The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
(k) Stock Plans. The term "Stock Plans" shall mean the Interface,
Inc. Omnibus Stock Incentive Plan, 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, together with
any other incentive stock plans adopted by the Company during the term of this
Agreement.
4. Benefits Following a Change in Control.
(a) Immediate Vesting of Stock Options. Upon the occurrence of a
Change in Control during the term of this Agreement, all outstanding stock
options (and stock appreciation rights, if any) granted to Executive under the
Stock Plans shall become 100% vested and thus immediately exercisable. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this subsection (a) shall constitute an amendment of Executive's stock option
agreements issued under the Stock Plans.
3
<PAGE>
(b) Termination Six Months Before or Two Years After Change in
Control. If a Change in Control occurs during the term of this Agreement and
Executive's employment is terminated (x) within 24 months following the date of
the Change in Control, or (y) within six months prior to the date of the Change
in Control and is related to such Change in Control, and in the case of either
(x) or (y) such termination is a result of Involuntary Termination or Voluntary
Termination, as defined below, then the benefits described in subsection (c)
below shall be paid or provided to Executive:
(i) Involuntary Termination. For purposes hereof,
"Involuntary Termination" shall mean termination of employment that is
involuntary on the part of Executive and that occurs for reasons other than for
Cause, Executive's Disability, the voluntary election of Executive to retire
(including early retirement) within the meaning of applicable retirement plans,
or Executive's death.
(ii) Voluntary Termination. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that is voluntary
on the part of Executive, and, in the judgment of Executive, is due to (A) a
reduction of Executive's responsibilities, title or status resulting from a
formal change in such title or status, or from the assignment to Executive of
any duties inconsistent with Executive's title, duties or responsibilities in
effect within the year prior to the Change in Control; (B) a reduction in
Executive's compensation or benefits, or (C) a Company- required involuntary
relocation of Executive's place of residence or a significant increase in
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, Executive's Disability, a voluntary election of Executive to
retire (including early retirement) within the meaning of applicable retirement
plans, or Executive's death; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under applicable
retirement plans at the time of Executive's termination due to the reasons in
(A), (B) or (C) of this subsection (b)(ii) shall not make Executive ineligible
to receive benefits under this Agreement.
(c) Benefits to be Provided. If Executive becomes eligible for
benefits under subsection (b) above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this subsection (c);
provided, however, that the compensation and benefits to be paid or provided
pursuant to paragraphs (i) through (v) of this subsection (c) shall be reduced
to the extent that Executive receives or is entitled to receive upon
Executive's termination the compensation and benefits (but only to the extent
Executive actually receives such compensation and benefits) described in
paragraphs (i) through (v) of this subsection (c) 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, further, after taking into
consideration any such reductions, Executive shall continue to be entitled to
receive in the aggregate under this Agreement and the employment agreement an
amount of compensation and benefits at least equal to 2.99 times Executive's
"Base Amount" as defined in Code Section 280G, and any amounts paid under
paragraphs (i), (ii) and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
4
<PAGE>
(i) Salary. Executive will continue to receive his
current salary (subject to withholding of all applicable taxes) for a period of
24 months from Executive's date of termination in the same manner as it was
being paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum payment, to
be paid not later than 30 days after Executive's termination of employment;
and, provided further, 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 3(i) above) on the date Executive's employment is
terminated. For purposes hereof, Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to Executive's
termination.
(ii) Bonuses and Incentives. Executive shall receive
bonus payments from the Company for the 24 months following the month in which
Executive's employment is terminated in an amount for each month equal to one-
twelfth of the average of the bonuses paid to Executive for the two calendar
years immediately preceding the year in which such termination occurs ("Average
Bonus"). Executive shall also receive a prorated bonus for the year in which
Executive's employment terminates equal to the Average Bonus multiplied by the
number of days Executive worked in such year divided by 365 days. Any bonus
amounts that 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, however, 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; and, provided further, 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 on the date Executive's employment is
terminated.
(iii) Health and Life Insurance Coverages. The health and
life insurance benefit coverages (including any executive medical and/or life
insurance plans) provided to Executive at Executive's date of termination shall
be continued by the Company at its expense at the same level and in the same
manner as if Executive's employment had not terminated (subject to the
customary changes in such coverages upon Executive's retirement or reaching age
65), beginning on the date of such termination and ending on the date 24 months
from the date of such termination. Any additional coverages 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 Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company
each month in advance (or in such other manner as the Company may agree). If
the terms of any benefit plan referred to in this subsection (c)(iii) do not
permit continued participation by Executive, the Company will arrange for other
coverage at its expense providing substantially similar benefits. The
coverages provided for in this subsection shall be applied against and reduce
the period for which COBRA benefits will be provided. If Executive is covered
by a split-dollar or similar life insurance program at the date of termination,
Executive shall have the option in Executive's sole discretion to have such
policy transferred to Executive upon termination, provided that, except as may
otherwise be provided in a separate agreement, the Company is paid for its
interest (i.e., the cash surrender value) in the policy upon such transfer.
5
<PAGE>
(iv) Employee Retirement Plans. If applicable law and the
provisions of the applicable plan permit continued participation, 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 Executive's date of termination, including, to the extent such plans are
still maintained by the Company, the Interface Flooring Systems, Inc.
Retirement Plan and Trust, and the Interface, Inc. Savings Investment Plan and
Trust (the "Savings Plan"). Executive's participation in such retirement plans
shall continue for a period of 24 months from the date of termination of
Executive's employment (at which point Executive will be considered to have
terminated employment within the meaning of the plans), and the compensation
payable to Executive under subsections (c)(i) and (c)(ii) of this Section 4
shall be treated (unless otherwise excluded under the terms of such retirement
plans) as compensation when computing benefits under such plans. For purposes
of the Savings Plan, 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. To the extent permissible
under applicable law, 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 Executive
and, if applicable, Executive's beneficiary, a supplemental benefit equal to
the present value on the date of termination of employment (calculated as
provided in each plan) of the excess of (A) the benefit Executive would have
been paid under such plan if Executive had continued to be covered for the
24-month period (less any amounts Executive 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 within 30 days of the date of termination.
(v) Other Stock Awards. As of Executive's date of
termination, all restrictions on all shares of restricted stock (or other
performance shares, performance units or deferred shares) awarded to Executive
under the Interface, Inc. Omnibus Stock Incentive Plan (or any other Stock
Plan) shall lapse, and such shares and awards shall become 100% vested. To the
extent inconsistent with this immediate vesting requirement, the provisions of
this paragraph (v) shall constitute an amendment of Executive's restricted
stock agreements issued under the Stock Plans.
(vi) Effect of Lump Sum Payment. The lump sum payment
under subsections (c)(i) and (c)(ii) of this Section 4 shall not alter the
amounts Executive is entitled to receive under the benefit plans and
arrangements described in subsections (c)(iii) and (c)(iv) 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 24 months.
(d) Termination More Than Two Years After Change in Control. In
the event Executive's employment is terminated by the Company without Cause at
any time after the second anniversary of a Change in Control, Executive shall
continue to be covered by, and entitled to the benefits provided under, all
restricted stock agreements issued under the Stock Plans, in accordance with
the terms of such agreements, and Executive shall be considered for purposes of
all such restricted stock agreements as continuing to be actively employed by
the Company after such termination.
6
<PAGE>
5. Adjustment of Benefits.
(a) Maximization of Amount. Notwithstanding anything in this
Agreement to the contrary, if, in the opinion of independent tax accountants
or counsel selected and retained by the Company and reasonably acceptable to
Executive ("Tax Counsel"), any of the compensation or benefits payable, or to
be provided, to Executive by the Company or any member of its affiliated group
(the Company and all members of its affiliated group being hereinafter
collectively referred to as the "Controlled Group") under this Agreement, any
other agreement between Executive and any member of the Controlled Group, or
any plan or policy of any member of the Controlled Group, are to be treated as
Excess Severance Payments subject in whole or in part to the excise tax imposed
under Code Section 4999 (the "Excise Tax"), then the Company shall direct Tax
Counsel to determine and compare Executive's net after-tax income under each of
the following assumptions: (i) all of the compensation and benefits payable by
the Controlled Group under all such arrangements are paid to Executive ("Full
Severance") and Executive pays all applicable federal, state and local taxes,
including, without limitation, the Excise Tax; or (ii) the total amount of the
compensation and benefits payable by the Controlled Group under all such
arrangements is reduced ("Reduced Severance") such that no Excess Severance
Payments result and the Excise Tax is not triggered. If Tax Counsel's
determination shows that payment to Executive of Full Severance provides
Executive with higher net after-tax income, then the Full Severance shall be
payable to Executive. If Tax Counsel's determination shows that Reduced
Severance provides Executive with higher net after-tax income, then Reduced
Severance shall be payable to Executive.
(b) Reduction of Amount. In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement are reduced to comply with this Section, the Company and
Executive jointly shall decide which Severance Payments are to be reduced;
provided, however, the Company shall not unreasonably deny the requests and
preferences of Executive in making this determination.
(c) Avoidance of Penalty Taxes. This Section 5 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Severance Payments exist and the most
advantageous outcome for Executive, 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. Both the Company and Executive shall cooperate
fully with Tax Counsel and provide Tax Counsel with all compensation and
benefit amounts, personal tax information and other information necessary or
helpful in calculating such net after-tax amounts. If Executive disputes Tax
Counsel's calculations, the dispute shall be resolved in accordance with
Section 6(f) below. 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) to achieve
this goal.
(d) Correction of Determination. If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding, or
pursuant to an opinion of Tax Counsel, that, notwithstanding the good faith of
the Company and Executive in applying the terms of this
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Section 5, either (i) the amounts paid to Executive unintentionally constituted
Excess Severance Payments and triggered the Excise Tax, even though the
payments to Executive were reduced in an effort to avoid such result; or (ii)
the amounts paid to Executive were reduced by more than was necessary to avoid
triggering the Excise Tax, then the parties shall make the applicable
correction that will achieve the goal described in Section 5(c) hereof. In the
event the error referred to in clause (i) hereof occurs, Executive shall repay
to the Company, within 10 days after the error is discovered, the amount
necessary to avoid the Excise Tax; provided, however, that if Executive, based
on advice from Tax Counsel and Executive's own tax advisor, determines that the
return of such amounts will not serve to eliminate the Excess Severance
Payments and the Excise Tax, the Company then shall be obligated to pay to
Executive, within 10 days after Executive notifies the Company of Executive's
determination, the total amount by which the original amount of Executive's
compensation and benefits were reduced pursuant to the terms of Sections 5(a)
and (b) hereof. In the event the error referred to in clause (ii) hereof
occurs, the Company shall pay to Executive, within 10 days after the error is
discovered, the maximum amount of the compensation and benefits that were
reduced pursuant to the terms of Sections 5(a) and (b) hereof that Executive
may receive without triggering the Excise Tax.
6. Miscellaneous.
(a) 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 (i) upon actual receipt if delivered in person or by facsimile
transmission, (ii) upon the earlier of actual receipt or the expiration of two
business days after sending by express courier (such as UPS or Federal
Express), and (iii) upon the earlier of actual receipt or the expiration of
seven days after mailing if sent by registered or certified express mail,
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.: 770-437-6822
Attn: Chief Executive Officer
With a copy to: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 770-319-6270
Attn: General Counsel
To Executive: Michael D. Bertolucci
at the last address and fax number
shown on the records of the Company
8
<PAGE>
Executive shall be responsible for providing the Company with a current
address. Either party may change its address (and facsimile number) for
purposes of notices under this Agreement by providing notice to the other party
in the manner set forth above.
(b) 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 hereto, 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
Executive, Executive's beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to all or substantially all
of the business of the Company by stock purchase, merger, consolidation,
purchase of assets or otherwise, shall be bound by and shall adopt and assume
this Agreement, and the Company shall obtain the express assumption of this
Agreement by such successor.
(c) Executive's Death. In the event Executive shall die after, or
within six months prior to, the date a Change in Control occurs and this
Agreement becomes operative, all amounts and benefits which would have been
payable or due to Executive if Executive had continued to live (including, in
the event Executive dies after a Voluntary or Involuntary Termination, the
amounts and benefits described in Section 4(c) hereof) shall be paid and
provided in accordance with the terms of this Agreement to the executors,
administrators, heirs or personal representatives of Executive's estate.
(d) No Obligation to Fund. The agreement of the Company (or its
successor) to make payments to Executive hereunder shall represent the
unsecured obligation of the Company (and its successor), except to the extent
(i) the terms of any other agreement, plan or arrangement pertaining to the
parties provide for funding; or (ii) the Company (or its successor) in its sole
discretion elects in whole or in part to fund the Company's obligations under
this Agreement pursuant to a trust arrangement or otherwise.
(e) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(USA).
(f) 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 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
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having jurisdiction. In the event 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(s). 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, however, that the fee for the arbitrator(s) shall be shared
equally.
(g) Amendment. This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
(h) 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.
(i) 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 Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By:/s/ Ray C. Anderson
-------------------------------------
Ray C. Anderson, Chairman and
Chief Executive Officer
Attest:/s/ Raymond S. Willoch
---------------------------------
Raymond S. Willoch, Secretary
EXECUTIVE:
/s/ Michael D. Bertolucci
----------------------------------------
Michael D. Bertolucci
10
==================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of JUNE 25, 1997
among
INTERFACE, INC.,
INTERFACE EUROPE B.V.,
INTERFACE EUROPE LIMITED,
THE LENDERS LISTED HEREIN,
SUNTRUST BANK, ATLANTA
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Agents,
and
SUNTRUST BANK, ATLANTA,
as Collateral Agent
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT made
and entered into as of June 25, 1997, by and among INTERFACE,
INC., a Georgia corporation ("Interface"), INTERFACE EUROPE 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 ("Europe 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 col-
lectively herein as the "Borrowers"), SUNTRUST BANK, ATLANTA, a
banking corporation organized under the laws of the State of
Georgia ("STBA"), THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association ("FNBC"), the other banks and lending
institutions listed on the signature pages hereof, and any
assignees of STBA, FNBC, or such other banks and lending
institutions which become "Lenders" as provided herein (STBA,
FNBC, and such other banks, lending institutions, and assignees
referred to collectively herein as the "Lenders"), SUNTRUST BANK,
ATLANTA, in its capacity as agent for those Lenders having
Domestic Syndicated Loan Commitments or Term Loan Commitments, or
both, or having outstanding Domestic Syndicated Loans or Term
Loans, or both, as provided herein, and each successor agent for
such Lenders as may be appointed from time to time pursuant to
Article XI hereof (the "Domestic Agent"), THE FIRST NATIONAL BANK
OF CHICAGO, in its capacity as agent for those Lenders having
outstanding Multicurrency Syndicated Loan Commitments or having
outstanding Multicurrency Syndicated Loans as provided herein,
and each successor agent for such Lenders as may be appointed
from time to time pursuant to Article XI hereof (the
"Multicurrency Agent"; the Domestic Agent and the Multicurrency
Agent referred to collectively herein as the "Co-Agents"), and
SUNTRUST BANK, ATLANTA, in its capacity as collateral agent for
the Co-Agents and Lenders and each successor collateral agent as
may be appointed from time to time pursuant to Article XI hereof
(the "Collateral Agent");
W I T N E S S E T H:
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WHEREAS, Interface, Interface Scherpenzeel B.V.,
Europe Limited, the Lenders listed therein, SunTrust Bank,
Atlanta and The First National Bank of Chicago, as Co-Agents, and
SunTrust Bank, Atlanta, as Collateral Agent, 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, by a
certain Third Amendment to Amended and Restated Credit Agreement
dated as of February 28, 1996, by a certain Fourth Amendment to
Amended and Restated Credit Agreement dated as of July 30, 1996,
and by a certain Fifth Amendment to Amended and Restated Credit
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Agreement dated as of December 29, 1996 (as so amended, the
"Existing Credit Agreement");
WHEREAS, the Borrowers have requested that the
Existing Credit Agreement be modified so as to (i) increase the
Multicurrency Syndicated Loan Commitments from an aggregate
principal amount of $60,000,000 to an aggregate principal amount
of $80,000,000, (ii) remove Interface Scherpenzeel B.V. as a
borrower under the Multicurrency Syndicated Facility and have
Europe B.V. become a party hereto and a borrower under the
Multicurrency Syndicated Facility, (iii) reduce the Domestic
Syndicated Loan Commitments from an aggregate principal amount of
$190,000,000 to an aggregate principal amount of $170,000,000,
(iv) permit Interface to borrow up to $75,000,000 under a new
term loan agreement to be entered into by Interface, and (v)
amend the Existing Credit Agreement in certain other respects;
WHEREAS, the Lenders, the Co-Agents, and the
Collateral Agent have agreed to amend and restate the Existing
Credit Agreement so as to incorporate the foregoing
modifications, subject to the terms, conditions and requirements
set forth in this Second Amended and Restated Credit Agreement;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, Interface, Europe
B.V., Europe Limited, the Lenders, the Co-Agents and the
Collateral Agent agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. In addition to the
other terms defined herein, the following terms used herein shall
have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):
"Accepted Domestic Bid Rate" shall mean, with
respect to a Domestic Bid Rate Loan made by a particular Domestic
Bid Rate Lender for the relevant Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of one percent)
offered by such Domestic Bid Rate Lender and accepted by
Interface pursuant to Section 3.06(c)(5).
"Accepted Multicurrency Bid Rate" shall mean, with
respect to a Multicurrency Bid Rate Loan made by a particular
Multicurrency Bid Rate Lender for the relevant Interest Period,
the rate of interest per annum (rounded to the nearest 1/100 of
one percent) offered by such Multicurrency Bid Rate Lender and
accepted by or on behalf of a Multicurrency Borrower pursuant to
Section 4.06(c)(5).
"Accounts Receivable Facilities" shall mean,
collectively, the receivables financing facilities evidenced by
the Receivables Transfer Agreements, the Receivables Sale
Agreements and the Receivables Backup Purchase Agreements
pursuant to which (i) certain of the Consolidated Companies shall
sell accounts receivable to Interface SPC, (ii) Interface SPC
shall sell such accounts receivable (or undivided ownership
interests therein) to SPARCC or CIBC, and (iii) under certain
circumstances, Interface SPC shall sell such accounts receivable
(or undivided ownership interests therein) to the Bank
Purchasers.<PAGE>
"Adjusted Working Capital" shall mean, as of the
date of any determination (i) the sum of all inventory, prepaid
expenses and accounts receivable of the Consolidated Companies,
plus without duplication (ii) the aggregate outstanding balance
of those accounts receivable previously sold by Interface SPC
pursuant to the Accounts Receivable Facility, minus (iii) the sum
of all accounts payable and accrued expenses of the Consolidated
Companies, in each case, determined on a consolidated basis in
conformity with GAAP.
"Adjusted LIBO Rate" shall mean, with respect to
each Interest Period for a Euro Advance, the sum of (i) the rate
obtained by dividing (a) LIBOR for such Interest Period by (b) a
percentage equal to 1 minus the then stated maximum rate (stated
as a decimal) of all reserves requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) applicable to any member bank of the Federal Re-
serve System in respect of Eurocurrency liabilities as defined in
Regulation D (or against any successor category of liabilities as
defined in Regulation D), plus (ii) if the relevant Eurocurrency
Advance is in British pounds sterling, a percentage sufficient to
compensate the Multicurrency Lenders for the cost of complying
with any reserves, liquidity and/or special deposit requirements
of the Bank of England directly or indirectly affecting the main-
tenance or funding of such Advances.
"Administrative Office" shall mean that office of
the Multicurrency Agent designated as its "Administrative Office"
on the signature page for such Multicurrency Agent, or such other
office as may hereafter be designated in writing by the
Multicurrency Agent to Interface as being the "Administrative Of-
fice" for purposes of this Agreement.
"Advance" shall mean any principal amount advanced
or to be advanced and outstanding at any time under (i) the Term
Loans or Domestic Syndicated Loans, which Advance shall be made
or outstanding in U.S. Dollars as a Base Rate Advance, CD Rate
Advance or Eurodollar Advance, as the case may be, (ii) the
Multicurrency Syndicated Loans, which Advance shall be made or
outstanding as a Base Rate Advance (which Advance shall be made
in U.S. Dollars) or Eurocurrency Advance (which Advance may be
made in any Currency), as the case may be, (iii) the Domestic
Swing Line Loans, which Advance shall be made or outstanding in
U.S. Dollars as a Base Rate Advance or Domestic Transaction Rate
Advance, as the case may be, (iv) the Multicurrency Swing Line
Loans, which Advance shall be made or outstanding in U.S. Dollars
as a Base Rate Advance or a Multicurrency Transaction Rate
Advance, as the case may be, (v) the Domestic Bid Rate Loans,
which Advance shall be made or outstanding in U.S. Dollars as a
Domestic Bid Rate Advance, and (vi) the Multicurrency Bid Rate
Loans, which Advance shall be made or outstanding in U.S. Dollars
as a Multicurrency Bid Rate Advance.
"Affiliate" of any Person means any other Person
directly or indirectly controlling, controlled by, or under
common control with, such Person, whether through the ownership
of voting securities, by contract or otherwise. For purposes of
this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by", and "under common
control with") as applied to any Person, means the possession,
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directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person.
"Aggregate L/C Outstandings" shall mean, at any
time with respect to all outstanding Letters of Credit, the sum
of the L/C Outstandings for each Letter of Credit.
"Agents" shall mean, collectively, the Co-Agents
and the Collateral Agent.
"Agreement" shall mean this Second Amended and
Restated Credit Agreement, as the same may be further amended,
restated, or supplemented from time to time.
Applicable Commitment Fee Rate shall mean the
rate for any day to be used to calculate commitment fees payable
by the Borrowers pursuant to Section 5.05(b) and 5.05(c),
expressed as a percentage and determined from the chart set forth
below based on Interface's Funded Debt Coverage Ratio calculated
as of the relevant determination date:
Funded Debt Applicable Commitment
Coverage Ratio Fee Rate
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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%
Each change in the Applicable Commitment Fee Rate resulting from a change
in the Funded Debt Coverage Ratio shall be effective from and after the
date that is five (5) Business Days after the date of delivery to the
Domestic Agent of the financial statements and certificates required by
Section 8.07(a), (b), and (c), as applicable, indicating such change,
until the date that is five (5) Business Days immediately following the
next date of delivery of such financial statements and certificates
indicating another such change. Notwithstanding the foregoing, at any
time during which Interface has failed to deliver the financial
statements and certificates when required by Section 8.07(a), (b), and
(c), as applicable, the Applicable Commitment Fee Rate shall be .25%.
Applicable Margin shall mean, with respect to all
outstanding Loans for any day, the applicable percentage determined from
the chart set forth below based on Interface s Funded Debt Coverage Ratio
calculated as of the relevant determination date:
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Funded Debt
Coverage Ratio Applicable Margin
Greater than or equal to 4.00 1.00%
Less than 4.00, but greater than
or equal to 3.50 .750%
Less than 3.50, but greater than
or equal to 3.00 .625%
Less than 3.00, but greater than
or equal to 2.50 .500%
Less than 2.50, but greater than
or equal to 2.00 .400%
Less than 2.00 .350%
Each change in the Applicable Margin resulting from a change in the
Funded Debt Coverage Ratio shall be effective with respect to outstanding
Loans from and after the date that is five (5) Business Days after the
date of delivery to the Domestic Agent of the financial statements and
certificates required by Section 8.07(a), (b), and (c), as applicable,
indicating such change, until the date that is five (5) Business Days
immediately following the next date of delivery of such financial
statements and certificates indicating another such change.
Notwithstanding the foregoing, at any time during which Interface has
failed to deliver the financial statements and certificates when required
by Section 8.07(a), (b), and (c), as applicable, the Applicable Margin
with respect to Loans then outstanding shall be 1.00%.
"Appropriate Co-Agent" shall mean (i) with respect to
matters relating to the Multicurrency Revolving Loans, the Multicurrency
Agent, and (ii) with respect to matters relating to the Domestic
Revolving Loans, the Term Loans, and all other matters not described in
the preceding clause (i), the Domestic Agent.
"Asset Sale" shall mean any sale or other disposition (or
a series of related sales or other dispositions), including without
limitation, loss, damage, destruction or taking, by any Consolidated
Company to any Person other than a Consolidated Company, of any property
or asset (including capital stock but excluding the issuance and sale by
Interface of its own capital stock) having an aggregate Asset Value in
excess of $100,000, other than (i) sales made in the ordinary course of
business of any Consolidated Company and (ii) sales of accounts
receivables (or undivided ownership interests therein) of a Consolidated
Company pursuant to the Accounts Receivable Facilities.
"Asset Value" shall mean, with respect to any property or
asset of any Consolidated Company, an amount equal to the greater of
(i) the book value of such property or asset as established in accordance
with GAAP, and (ii) the fair market value of such property or asset as
determined in good faith by the board of directors (or equivalent
governing body in the case of any Foreign Subsidiary) of such
Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in
accordance with the terms of this Agreement and substantially in the form
of Exhibit H.
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"Bank Purchasers" shall mean, collectively, CIBC and each
other financial institution, if any, that becomes a party to the
Receivables Backup Purchase Agreements, and their respective successors
and assigns.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978,
as amended and in effect from time to time (11 U.S.C. Sec. 101 et seq.).
"Base Rate" shall mean the average of the following two
rates (with any change in the Base Rate to be effective as of the date of
change of either of the following rates):
(i) the higher of (a) the rate which the Multicurrency
Agent publicly announces from time to time as its corporate
base rate, as in effect from time to time, and (b) the Federal
Funds Rate, as in effect from time to time, plus one-half of
one percent (0.50%) per annum. The Multicurrency Agent's
corporate base rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged
to any customer; the Multicurrency Agent may make commercial
loans or other loans at rates of interest at, above or below
the Multicurrency Agent's corporate base rate; and
(ii) the higher of (a) the rate which the Domestic Agent
publicly announces from time to time to be its prime lending
rate, as in effect from time to time, and (b) the Federal Funds
Rate, as in effect from time to time, plus one-half of one
percent (0.50%) per annum. The Domestic Agent's prime lending
rate is a reference rate and does not necessarily represent the
lowest or best rate charged to customers; the Domestic Agent
may make commercial loans or other loans at rates of interest
at, above or below the Domestic Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or out-
standing as (i) a portion of the Term Loans or Domestic Revolving Loans,
as the case may be, bearing interest based on the Base Rate as provided
in Section 5.03(a)(i), or (ii) Multicurrency Revolving Loans made in U.S.
Dollars bearing interest based on the Base Rate as provided in
Section 5.03(b)(i).
"Bentley" shall mean Bentley Mills, Inc., a Delaware
corporation.
"Bentley Acquisition" shall mean the acquisition by In-
terface of all the capital stock of Bentley through the consummation of
the transactions described in the Bentley Purchase Agreement, other
purchases of the capital stock of Bentley and, if necessary, the merger
of a Consolidated Company with and into Bentley.
"Bentley Purchase Agreement" shall mean that certain
Agreement for Purchase of Capital Stock dated as of June 8, 1993, among
Interface, Bentley, First Capital Corporation of Chicago, Madison
Dearborn Partners IV, Chrysler Capital Corporation, and Royce Renfroe, as
the same may hereafter be amended, restated, or supplemented from time to
time as permitted by Section 9.13(b), providing for the purchase by
Interface of capital stock of Bentley, as follows: (i) 32,700 shares
(representing 85.7%) of the issued and outstanding shares of Bentley's
Senior Preferred Stock, (ii) 15,621.5 shares (representing 78.5%) of the
issued and outstanding shares of Bentley's Junior Preferred Stock,
(iii) 826,920 shares (representing 76.2%) of the issued and outstanding
shares of Bentley's Class A Common Stock, and (iv) 490,453 shares (repre-
senting 85.8%) of the issued and outstanding shares of Bentley's Class B
Common Stock, together with all additional shares of such capital stock
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of each other shareholder of Bentley that subsequently becomes a party to
such Agreement.
"Borrowers" shall mean, (i) with respect to the Term Loans
and Domestic Revolving Loans, Interface, and (ii) collectively, with
respect to the Multicurrency Revolving Loans, Interface, Europe B.V., and
Europe Limited, and their respective successors and permitted assigns.
"Borrowing" shall mean the incurrence by any Borrower
under any Facility of Advances of one Type concurrently having the same
Interest Period (except as otherwise provided in Sections 5.09 and 5.10)
or the continuation or conversion of an existing Borrowing or Borrowings
in whole or in part.
"Business Day" shall mean any day excluding Saturday,
Sunday and any other day on which banks are required or authorized to
close in Atlanta, Georgia, New York, New York or Chicago, Illinois and,
if the applicable Business Day relates to Euro Advances, on which trading
is not carried on by and between banks in deposits of the applicable
Currencies in the applicable interbank Eurocurrency market.
"CD Rate Advance" shall mean an Advance made or out-
standing as a portion of the Term Loans or Domestic Syndicated Loans, as
the case may be, bearing interest based on the Fixed CD Rate as provided
in Section 5.03(a)(ii).
"CIBC" shall mean Canadian Imperial Bank of Commerce, a
banking institution organized and existing under the laws of Canada, and
its successors and assigns.
"Capital Expenditures" shall mean, for any period, the sum
of (i) expenditures (whether paid in cash or accrued as a liability,
including the portion of capital leases originally incurred during such
period that is capitalized on the consolidated balance sheet of the
Consolidated Companies) by the Consolidated Companies during that period
that, in conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
financial statements of the Consolidated Companies, and (ii) to the
extent not included in clause (i) above, expenditures for all net non-
current assets of businesses acquired by the Consolidated Companies
during that period, including all purchase price adjustments, other than
such assets acquired in transactions where all or substantially all of
the consideration paid for such assets consisted of capital stock of a
Consolidated Company.
"Cash Taxes Paid" shall mean, for any fiscal period of
Interface, the provision of the Consolidated Companies for taxes paid as
shown on the income statement of Interface for such period minus any
increase (or plus any decrease) in the provision for deferred taxes of
the Consolidated Companies as included in the long-term liabilities of
Interface, determined on a consolidated basis in accordance with GAAP.
"Certificate of Deposit Rate" shall mean, with respect to
each Interest Period for a CD Rate Advance, the rate (rounded, if
necessary, to the next higher 1/16 of 1.0%, if the rate is not such a
multiple), as determined by the Domestic Agent at approximately 9:00 A.M.
(Atlanta, Georgia time) on the first day of the Interest Period for which
such Certificate of Deposit Rate is to be applicable, identified on
Telerate as the consensus bid rate for secondary certificates of deposit
in an aggregate amount approximately comparable to the CD Rate Advance to
which such Certificate of Deposit Rate is to be applicable and with a
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maturity equal to such Interest Period. As of the date of the execution
of this Agreement, such consensus bid rate appears on page 5 of Telerate.
If the foregoing rate is unavailable on Telerate for any reason, then
such rate shall be determined by the Domestic Agent from the comparable
rate quoted on another interest rate reporting service of recognized
standing as designated by the Domestic Agent to Interface and the
Domestic Syndicated Lenders.
"Change in Control" shall mean and be deemed to occur on
the earliest of, and upon any subsequent occurrence of:
(a) at any time during which the holders of Interface's
Class B common stock are entitled to elect a majority of
Interface's board of directors, the members of the Existing
Shareholder Group shall at any time fail to be the "beneficial
owners" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934 (the "Exchange Act")) of a
majority of the issued and outstanding shares of Interface's
Class B common stock;
(b) at any time during which the holders of Interface's
Class B common stock have ceased to be entitled to elect a
majority of Interface's board of directors, (i) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than the Existing Shareholder Group,
shall become the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) of more than 35% of the total
capital stock of Interface entitled to vote for the election of
directors (the "Voting Stock"), if at such time the members of
the Existing Shareholder Group (A) "beneficially own" (as so
defined) a lower percentage of the Voting Stock than such other
person or "group" and (B) do not have the right or ability by
voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of Interface, or
(ii) Interface consolidates with, or merges with or into,
another person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to
any person, or any person consolidates with, or merges with or
into, Interface, in any such event pursuant to a transaction in
which the outstanding Voting Stock of Interface is converted
into or exchanged for cash, securities or other property, other
than any such transaction where (A) the outstanding Voting
Stock of Interface is converted into or exchanged for (1)
Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation or (2) cash, securities and
other property in an amount which could then be paid by
Interface pursuant to Section 9.04, or a combination thereof,
and (B) immediately after such transaction no "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), excluding the members of the Existing
Shareholder Group, is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time, upon the happening of an event or otherwise), directly
or indirectly, of more than 50% of the total Voting Stock of
the surviving or transferee corporation;
(c) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the
board of directors of Interface (together with any new
directors whose election by such board of directors or whose
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nomination for election by the stockholders of Interface was
approved by a vote of 66-2/3% of the directors then still in
office who were either directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the board of directors of Interface then in office;
or
(d) Interface is liquidated or dissolved or adopts a plan
of liquidation.
"Change in Control Provision" shall mean any term or
provision contained in any indenture, debenture, note, or other agreement
or document evidencing or governing Interface Control Debt which
requires, or permits the holder(s) of such Interface Control Debt to
require, that such Interface Control Debt be redeemed, repurchased,
defeased, prepaid or repaid, either in whole or in part, or the maturity
of such Interface Control Debt to be accelerated in any respect, as a
result of a change in ownership of the capital stock of Interface or
voting rights with respect thereto.
"Class B Shareholders' Agreement" shall mean that certain
Voting Agreement for Interface, Inc. Class B Common Stock Shareholders
dated as of April 13, 1993, by and among Ray C. Anderson and
approximately 38 other holders of Class B common stock of Interface,
pursuant to which Ray C. Anderson is entitled to direct the voting of the
shares of Class B common stock subject thereto.
"Collateral Agent" shall mean STBA acting in the capacity
as collateral agent, collateral trustee, pledgee, secured party, or any
similar capacity under any Security Document, any nominee or designee of
STBA acting in such capacity, and any successor collateral agent
appointed from time to time pursuant to Article XI.
"Commitment" shall mean (i) for any Lender at any time,
any of its Term Loan Commitment, Domestic Syndicated Loan Commitment, or
Multicurrency Syndicated Loan Commitment, (ii) for the Domestic Swing
Line Lender at any time, its Domestic Swing Line Commitment, and
(iii) for the Multicurrency Swing Line Lender at any time, its
Multicurrency Swing Line Commitment, in each case as the context may
require.
"Consolidated Companies" shall mean, collectively, In-
terface and all of its Subsidiaries.
"Consolidated EBITA" shall mean, for any fiscal period of
Interface, an amount equal to (A) the sum for such fiscal period of
Consolidated Net Income (Loss) plus, to the extent subtracted in
determining such Consolidated Net Income (Loss), provisions for taxes
based on income, Consolidated Interest Expense, Subordinated Debentures
Redemption Charge, and amortization of goodwill and deferred financing
costs, minus (B) any items of gain (or plus any items of loss) which were
included in determining such Consolidated Net Income (Loss) and were (x)
not realized in the ordinary course of business or (y) the result of any
sale of assets.
"Consolidated EBITDA" shall mean, for any fiscal period of
Interface, an amount equal to (i) Consolidated EBITA for such period,
plus (ii) to the extent subtracted in determining Consolidated Net Income
(Loss) for such period, depreciation expense of the Consolidated
Companies determined for such period in conformity with GAAP.
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"Consolidated Interest Expense" shall mean, for any fiscal
period of Interface, total interest expense of the Consolidated Companies
(including without limitation, interest expense attributable to
capitalized leases in accordance with GAAP, all capitalized interest, all
commissions, discounts and other fees and charges owed with respect to
bankers acceptance financing, and total interest expense (whether shown
as interest expense, other expense, or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any
fiscal period of Interface, the net income (or loss) of the Consolidated
Companies on a consolidated basis for such period (taken as a single
accounting period) determined in conformity with GAAP, but excluding
therefrom (to the extent otherwise included therein) (i) any gains or
losses, together with any related provision for taxes, realized upon any
sale of assets other than in the ordinary course of business, (ii) any
income or loss of any Person accrued prior to the date such Person
becomes a Subsidiary of Interface or is merged into or consolidated with
any Consolidated Company or all or substantially all of such Person's
assets are acquired by any Consolidated Company, and (iii) the income of
any Consolidated Company to the extent that the declaration or payment of
dividends or similar distributions by such Consolidated Company of that
income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation.
"Consolidated Net Worth" shall mean, as of any date of
determination, Shareholders' Equity of Interface, excluding (i) the
effects of foreign currency translation adjustments under Financial
Accounting Standards Board Statement No. 52 as in effect on the date
hereof, and (ii) after-tax gains on the sales of assets outside the
ordinary course of business of the Consolidated Companies and any after-
tax gains with respect to pension reversions, in any case with respect to
(i) and (ii) above, as such adjustments or gains occur subsequent to
December 29, 1991.
"Consolidated Total Liabilities" shall mean, as at any
date of determination, total liabilities of the Consolidated Companies
determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any agreement,
instrument or undertaking under which such Person is obligated or by
which it or any of the property owned by it is bound.
"Contribution Agreement" shall mean the Amended and
Restated Contribution Agreement executed by each of the Guarantors,
substantially in the form of Exhibit I attached hereto, as the same may
be amended, restated or supplemented from time to time.
"Convertible Preferred Stock" shall mean Interface's
Series A Cumulative Convertible Preferred Stock having an aggregate
liquidation value of $25,000,000 and 7.0% cumulative dividend, being
convertible into shares of Interface's Class A common stock at the rate
of one share of Class A common stock for each $14.7875 of "conversion
value" of such Preferred Stock (as defined in the Articles of Amendment
of Interface executed with respect to such Preferred Stock and subject to
adjustments as provided therein), and being subject to redemption at the
option of the holders thereof not earlier than June 1, 2003, on the terms
and conditions set forth in such Articles of Amendment.
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"Credit Documents" shall mean, collectively, this Agree-
ment, the Notes, the Letter of Credit Agreement, the Guaranty Agreements,
the Pledge Agreements, the L/C Cash Collateral Assignment, the IRB
Collateral Documents, and all other Security Documents.
"Credit Parties" shall mean, collectively, each of the
Borrowers, the Guarantors, and the L/C Account Parties (including all
Persons that are currently Borrowers, Guarantors, and L/C Account Parties
and all Persons who may at any time in the future become Borrowers,
Guarantors, or L/C Account Parties), and every other Person who from time
to time executes a Security Document with respect to all or any portion
of the Obligations.
"Currency" shall mean, with respect to the Multicurrency
Loan Commitments, Dollars, British pounds sterling, Dutch guilders,
French francs, German marks and Japanese yen, as selected by the
applicable Borrower.
"Currency Contracts" shall mean any forward contracts,
futures contracts, foreign exchange contracts, currency swap agreements,
and other similar agreements and arrangements entered into by any
Consolidated Company designed to protect any Consolidated Company against
fluctuations in foreign exchange rates.
"Default" shall mean any condition or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"Distributor Credit Facilities" shall mean, collectively,
the unsecured lines of credit established by retail distributors of
commercial products of the Consolidated Companies to fund such retail
distributors' working capital needs and having maturities in each case no
longer than two (2) years with annual renewals thereafter, as such lines
of credit were in effect immediately prior to the time that Interface or
its Subsidiaries acquired an ownership interest in, or all or a
substantial portion of the assets or business of, such retail
distributors.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"Dollar Equivalent" shall mean, with respect to any mon-
etary amount in a currency other than U.S. Dollars, at any time for the
determination thereof, the amount of U.S. Dollars obtained by converting
such currency involved in such computation into U.S. Dollars at the spot
rate for the purchase of U.S. Dollars with the applicable currency as
quoted by the Multicurrency Agent as of the close of business on the date
of determination thereof specified herein or, if the date of
determination thereof is not otherwise specified herein, on the date two
applicable Business Days prior to such determination.
"Domestic Agent" shall mean STBA, acting in the manner and
to the extent described in Article XI, and any successor domestic agent
appointed pursuant to Article XI hereof.
"Domestic Bid Rate" shall mean the rate of interest
specified by a Domestic Syndicated Lender in its Domestic Bid Rate Quote
as provided in Section 3.06(c)(3).
"Domestic Bid Rate Acceptance Notice" shall mean the
notice given by Interface to the Domestic Agent accepting one or more
Domestic Bid Rate Quotes as provided in Section 3.06(c)(5).
- 11 -<PAGE>
"Domestic Bid Rate Advance" shall mean a Borrowing
pursuant to Section 3.06 consisting of the aggregate amount of one or
more Domestic Bid Rate Loans made by one or more of the Domestic
Syndicated Lenders to Interface at the same time, on the same interest
rate basis, and for the same Interest Period.
"Domestic Bid Rate Borrowing" shall mean a Borrowing
consisting or to consist of a Domestic Bid Rate Advance.
"Domestic Bid Rate Facility" shall mean the credit
facility being made available by the Domestic Syndicated Lenders to
Interface as described in Section 3.06(a).
"Domestic Bid Rate Lender" shall mean a Domestic
Syndicated Lender making one or more Domestic Bid Rate Loans pursuant to
Section 3.06.
"Domestic Bid Rate Loans" shall mean, collectively, the
loans made to Interface by the Domestic Bid Rate Lenders pursuant to
Section 3.06.
"Domestic Bid Rate Notes" shall mean, collectively, the
promissory notes evidencing the Domestic Bid Rate Loans substantially in
the form of Exhibit L and duly completed in accordance with the terms
hereof.
"Domestic Bid Rate Quote" shall mean an offer or offers by
a Domesticated Syndicated Lender to make one or more Domestic Bid Rate
Loans to Interface, substantially in the form of Exhibit Q hereto
completed and delivered by such Domesticated Syndicated Lender to the
Domestic Agent in accordance with Section 3.06(c)(3).
"Domestic Bid Rate Quote Request" shall mean a request
transmitted by Interface to the Domestic Agent for offers from the
Domestic Syndicated Lenders to make Domestic Bid Rate Loans substantially
in the form of Exhibit O hereto completed and delivered to the Domestic
Agent in accordance with Section 3.06(c)(1).
"Domestic Revolving Loans" shall mean, collectively, all
Domestic Syndicated Loans, Domestic Swing Line Loans, and Domestic Bid
Rate Loans.
"Domestic Swing Line Advance" shall mean a Borrowing
pursuant to Section 3.05 consisting of a Domestic Swing Line Loan (which
may be made either as a Base Rate Advance or as a Domestic Transaction
Rate Advance) made by the Domestic Swing Line Lender to Interface on the
same date and interest rate basis and, if made as a Fixed Rate Advance,
for the same Interest Period.
"Domestic Swing Line Borrowing" shall mean a Borrowing
consisting or to consist of a Domestic Swing Line Advance.
"Domestic Swing Line Borrowing Notice" shall mean the
notice given by Interface to the Domestic Agent requesting a Domestic
Swing Line Advance as provided in Section 3.05(c).
"Domestic Swing Line Commitment" shall mean the commitment
of the Domestic Swing Line Lender to make Domestic Swing Line Loans in an
aggregate principal amount at any time outstanding not to exceed
$5,000,000.
"Domestic Swing Line Facility" shall mean the credit
facility described in Section 3.05.
- 12 -<PAGE>
"Domestic Swing Line Lender" shall mean STBA or any
subsequent Domestic Syndicated Lender extending to Interface the Domestic
Swing Line Commitment hereunder.
"Domestic Swing Line Loans" shall mean, collectively, the
loans made to Interface by the Domestic Swing Line Lender pursuant to
Section 3.05.
"Domestic Swing Line Note" shall mean the promissory note
evidencing the Domestic Swing Line Loans substantially in the form of
Exhibit K and duly completed in accordance with the terms hereof.
"Domestic Syndicated Advance" shall mean a Borrowing
pursuant to Section 3.02 consisting of the aggregate amount of Domestic
Syndicated Loans made by the Domestic Syndicated Lenders to Interface at
the same time, on the same interest rate basis and, if made as a Fixed
Rate Advance, for the same Interest Period.
"Domestic Syndicated Borrowing" shall mean a Borrowing
consisting or to consist of a Domestic Syndicated Advance.
"Domestic Syndicated Borrowing Notice" shall mean the
notice given by Interface to the Domestic Agent requesting one or more
Domestic Syndicated Advances as provided in Section 3.02(c).
"Domestic Syndicated Facility" shall mean the credit
facility made available by the Domestic Syndicated Lenders to Interface
as described in Section 3.02(a).
"Domestic Syndicated Lenders" shall mean, collectively,
the Lenders extending the Domestic Syndicated Loan Commitments to
Interface pursuant to Section 3.02(a).
"Domestic Syndicated Loan Commitments" shall mean, at any
time for any Domestic Syndicated Lender, the amount of such commitment
set forth opposite such Domestic Syndicated Lender's name on the
signature pages of this Agreement, as the same may be increased or
decreased from time to time as a result of any reduction thereof pursuant
to Section 3.03, any assignment thereof pursuant to Section 12.06, or any
amendment thereof pursuant to Section 12.02, such commitment including,
without limitation, such Domestic Syndicated Lender's L/C Subcommitment.
"Domestic Syndicated Loans" shall mean, collectively, the
loans made to Interface by the Domestic Syndicated Lenders pursuant to
Section 3.02.
"Domestic Syndicated Notes" shall mean, collectively, the
promissory notes evidencing the Domestic Syndicated Loans in the form
attached hereto as Exhibit B duly completed in accordance with the terms
hereof.
"Domestic Transaction Rate" shall mean the rate of
interest specified by the Domestic Swing Line Lender to Interface as
being applicable to a Domestic Swing Line Loan requested by Interface
pursuant to Section 3.05(c).
"Domestic Transaction Rate Advance" shall mean an Advance
made or outstanding as a Domestic Swing Line Loan bearing interest based
on the Domestic Transaction Rate as provided in Section 5.03(a)(iv).
- 13 -<PAGE>
"Domestic Transaction Rate Quote" shall mean an offer by
the Domestic Swing Line Lender to make a Domestic Swing Line Loan to
Interface at the Domestic Transaction Rate specified therein for the
Interest Period to be applicable to the Domestic Swing Line Loan as
specified therein, pursuant to Section 3.05(c).
"Eligible Assignee" shall mean any financial institution
reasonably acceptable to Interface and the Co-Agents.
"Environmental Laws" shall mean all federal, state, local
and foreign statutes and codes or regulations, rules or ordinances
issued, promulgated, or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or
asbestos containing material or exposure to asbestos or asbestos
containing material), relating to pollution or protection of the
environment and relating to public health and safety, relating to
(i) emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by
any Environmental Law into the environment (including without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), or (ii) the manufacture, processing, distribution, use, genera-
tion, treatment, storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil or any fraction
thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without
limitation (i) the Clean Air Act (42 U.S.C. Sec. 7401 et seq.), (ii) the
Clean Water Act (33 U.S.C. Sec. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. sec. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. Sec. 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. Sec. 9601 et seq.),
and (vi) all applicable national and local hindrance laws (including,
without limitation "hinderwet") or regulations and the specific terms of
hindrance licenses granted to the Heuga Entities and with all national
and local building, zoning, environmental control or other similar laws
or regulations under specific terms of construction licenses (including,
without limitation, "bouwvergunningen").
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person,
each trade or business (whether or not incorporated) which is a member of
a group of which that Person is a member and which is under common
control within the meaning of the regulations promulgated under
Section 414 of the Tax Code.
"Escrow Letter" shall mean a letter agreement between
Interface and the Collateral Agent substantially in the form of Exhibit J
hereto.
"Euro Advance" shall mean (i) a Eurodollar Advance, or
(ii) a Eurocurrency Advance.
"Eurocurrency Advance" shall mean an Advance made or
outstanding as Multicurrency Syndicated Loans bearing interest based on
the Adjusted LIBO Rate or Special Adjusted LIBO Rate as provided in
Section 5.03(b)(ii).
- 14 -<PAGE>
"Eurodollar Advance" shall mean an Advance made or out-
standing in U.S. Dollars as a portion of the Term Loans or Domestic
Syndicated Loans, as the case may be, bearing interest based on the Ad-
justed LIBO Rate as provided in Section 5.03(a)(iii).
"Europe B.V." shall mean Interface Europe 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 Nether-
lands, its successors and permitted assigns.
"Europe Limited" shall mean Interface Europe Limited
(formerly Interface Flooring Systems Limited), a private company limited
by shares organized and existing under the laws of England and Wales, its
successors and permitted assigns.
"Event of Default" shall have the meaning provided in
Article X.
"Excess Cash Flow" shall mean, for any fiscal year of
Interface (A) the sum of the amounts for such fiscal year of Con-
solidated Net Income (Loss), plus (to the extent subtracted in
determining such Consolidated Net Income (Loss)) depreciation expense,
amortization expense, provisions for deferred tax expense based on income
(or minus provisions for deferred tax credit, as the case may be), and
other non-cash items reducing Consolidated Net Income (Loss) (or minus
other non-cash items increasing Consolidated Net Income (Loss)), as
determined in accordance with GAAP, all as determined on a consolidated
basis for the Consolidated Companies, minus (B) the sum of (i) Capital
Expenditures for such fiscal year, (ii) the amount by which Adjusted
Working Capital as determined on the last day of such fiscal year exceeds
(or minus the amount by which such Adjusted Working Capital is less than)
Adjusted Working Capital as determined on the last day of the preceding
fiscal year (such changes in Adjusted Working Capital caused by currency
fluctuations to be calculated in accordance with FASB-52), (iii) required
principal payments on the Term Loans pursuant to Section 2.02(b), and
required principal payments on the 1997 Term Loans pursuant to Section
2.02(b) of the 1997 Term Loan Agreement, during such fiscal year,
(iv) regularly scheduled principal payments on other Indebtedness of the
Consolidated Companies as permitted under Section 9.01 during such fiscal
year, and (v) the total amount of regularly scheduled cash dividends with
respect to capital stock paid by Interface during such fiscal year as
permitted under Section 9.04.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, and any successor statute thereto.
"Existing Shareholder Group" shall mean (i) for so long as
Ray C. Anderson shall be living and is performing the duties of chairman
of Interface, Ray C. Anderson and each other party to the Class B
Shareholders' Agreement, Daniel T. Hendrix, Charles R. Eitel, and Brian
L. DeMoura, and (ii) at all times thereafter, the individuals listed on
Schedule 10.11; provided that in the case of each individual referred to
in the preceding clauses (i) and (ii), for purposes of this definition
the reference to such individual shall be deemed to include the members
of such individual's immediate family, such individual's estate, and any
trusts established by such individual (whether inter vivos or
testamentary) for the benefit of members of such individual's immediate
family.
- 15 -<PAGE>
"FASB-52" shall mean Financial Accounting Standards Board
Statement No. 52, as in effect on the date of this Agreement, specifying
applicable accounting principles with respect to translation of foreign
currencies.
"FCB Account" shall mean, with respect to Advances made in
each Currency other than Dollars under the Multicurrency Loan Commitment,
the account maintained by the Multicurrency Agent for disbursements to,
and payments from, the respective Borrower in such Currency, as more
particularly described on Schedule 4.01.
"FC Bank" shall mean, for each FCB Account, the bank at
which such FCB Account shall be maintained, as more particularly
described on Schedule 4.01.
"Facility" or "Facilities" shall mean the credit facili-
ties made available to the Borrowers pursuant to the Term Loan
Commitments, the Domestic Syndicated Loan Commitments, the Domestic Swing
Line Commitment, the Domestic Bid Rate Facility, the Multicurrency
Syndicated Loan Commitments, the Multicurrency Swing Line Commitment, or
the Multicurrency Bid Rate Facility, as the context may indicate.
"Federal Funds Rate" shall mean for any period, a fluc-
tuating interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds transactions
with member banks of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Domestic Agent from three Federal funds
brokers of recognized standing selected by the Domestic Agent.
"FNBC Currency Contract" shall mean the Interest Rate and
Currency Exchange Agreement dated as of June 30, 1992, between Heuga
Nederland B.V. (now Scherpenzeel B.V.) and The First National Bank of
Chicago (acting through its London Branch), together with all exhibits
and schedules thereto and all confirmations of transactions executed
thereunder, as amended by the Amendment to Interest Rate and Currency
Exchange Agreement dated as of January 9, 1995, and as the same have been
and hereafter may be amended, restated or supplemented from time to time.
"Fixed CD Rate" shall mean, with respect to each Interest
Period for a CD Rate Advance, the sum of (i) the rate obtained by
dividing (x) the Certificate of Deposit Rate for such Interest Period by
(y) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserve requirements as specified in Regulation D
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable during such Interest Period to new
nonpersonal time deposits in the United States in an amount equal to or
in excess of $100,000 with a maturity comparable to such Interest Period
of any member bank of the Federal Reserve System, plus (ii) the then
daily net annual assessment rate as estimated by the Domestic Agent for
determining the then current annual assessment payable to the Federal
Deposit Insurance Corporation for insuring time deposits of the Domestic
Agent in the United States.
"Fixed Rate Advance" shall mean a CD Rate Advance, Euro
Advance, Domestic Bid Rate Advance, Multicurrency Bid Rate Advance and,
to the extent quoted to and accepted by a Borrower on the basis of a
fixed rate of interest for a specified Interest Period pursuant to
Section 3.05 or 4.05, a Domestic Transaction Rate Advance or
Multicurrency Transaction Rate Advance.
- 16 -<PAGE>
"Foreign Plan" shall mean any pension, profit sharing,
deferred compensation, or other employee benefit plan, program or
arrangement maintained by any Foreign Subsidiary which, under applicable
local law, is required to be funded through a trust or other funding
vehicle.
"Foreign Subsidiary" shall mean each Consolidated Company
that is organized under the laws of a jurisdiction other than the United
States of America or any State thereof.
"Funded Debt" shall mean all Indebtedness for money bor-
rowed, Indebtedness evidenced or secured by purchase money Liens,
capitalized leases, conditional sales contracts and similar title
retention debt instruments, and Indebtedness evidenced by bonds,
debentures, notes or other similar instruments, including all current
maturities of such Indebtedness. The calculation of Funded Debt shall
include all Funded Debt of the Consolidated Companies, plus (i) all
Funded Debt of other Persons to the extent guaranteed by a Consolidated
Company, to the extent supported by a letter of credit issued for the
account of a Consolidated Company, or as to which and to the extent which
a Consolidated Company or its assets otherwise have become liable for
payment thereof, (ii) the aggregate outstanding "Investment" of the
purchasers pursuant to the Receivables Sale Agreements, (iii) the
aggregate outstanding "Investment" of the purchasers pursuant to the
Receivables Backup Purchase Agreements plus (without duplication)
(iv) any other amounts due and owing to the Bank Purchasers pursuant to
the Receivables Backup Purchase Agreements.
"Funded Debt Coverage Ratio" shall mean, as of the last
day of any fiscal quarter of Interface, the ratio of (A) Funded Debt as
of such day, to (B) the sum of Consolidated EBITDA for the fiscal quarter
then ending and the immediately preceding three fiscal quarters.
"GAAP" shall mean generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable to
the circumstances as of the date of determination.
"Guarantors" shall mean, collectively, Interface,
Interface Interior Fabrics, Inc. (formerly 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,
Intek, Inc., Toltec Fabrics, Inc., Interface Architectural Resources,
Inc. (formerly C-Tec, Inc.), Flooring Consultants, Inc., Lasher/White
Carpet Company, Inc., B. Shehadi & Sons, Inc., the 1996 Reorganization
Credit Parties, and all other Material Subsidiaries (other than Interface
SPC) that are not Foreign Subsidiaries, and their respective successors
and permitted assigns.
"Guaranty" shall mean any contractual obligation, con-
tingent or otherwise, of a Person with respect to any Indebtedness or
other obligation or liability of another Person, including without
limitation, any such Indebtedness, obligation or liability directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including contractual obligations
(contingent or otherwise) arising through any agreement to purchase,
- 17 -<PAGE>
repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or any agreement to provide funds for
the payment or discharge thereof (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to
make any payment other than for value received. The amount of any
Guaranty shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which
guaranty is made or, if not so stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person
is required to perform thereunder) as determined by such Person in good
faith.
"Guaranty Agreements" shall mean, collectively, the
Amended and Restated Interface Guaranty Agreement and the Amended and
Restated Subsidiary Guaranty Agreement executed by the Guarantors in
favor of the Lenders and the Co-Agents, substantially in the form of
Exhibits D-1 and D-2, respectively, as the same may be amended, restated
or supplemented from time to time.
"Hazardous Substances" shall have the meaning assigned to
that term in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Acts of 1986.
"Heuga Entities" shall mean Interface Europe B.V. (for-
merly Interface Heuga B.V.) and all Subsidiaries of Interface Europe B.V.
"IRB Collateral Documents" shall mean, collectively, the
mortgages, deeds of trust, deeds to secure debt, assignments of leases,
security agreements, pledge agreements, and other security and collateral
documents securing the obligations of any L/C Account Parties in respect
of Letters of Credit issued by the L/C Issuer for the account of such
parties in support of industrial development revenue bonds.
"Indebtedness" of any Person shall mean, without dupli-
cation (i) all obligations of such Person which in accordance with GAAP
would be shown on the balance sheet of such Person as a liability
(including, without limitation, obligations for borrowed money and for
the deferred purchase price of property or services, and obligations
evidenced by bonds, debentures, notes or other similar instruments);
(ii) all rental obligations under leases required to be capitalized under
GAAP; (iii) all Guaranties of such Person (including contingent
reimbursement obligations under undrawn letters of credit);
(iv) Indebtedness of others secured by any Lien upon property owned by
such Person, whether or not assumed; (v) obligations or other
liabilities under Currency Contracts, Interest Rate Contracts, or similar
agreements or combinations thereof; and (vi) Redeemable Capital Stock of
such Person valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued dividends. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which
does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Agreement, and if such price
is based on, or measured by, the fair market value of such Redeemable
Capital Stock, such fair market value shall be determined in good faith
by the board of directors of the issuer of such Redeemable Capital Stock.
"Indemnity Agreement" shall mean the Second Supplemental
Indemnification Agreement executed by Interface in favor of the Lenders
and the Co-Agents, substantially in the form of Exhibit U, as the same
may be amended, restated, or supplemented from time to time.
- 18 -<PAGE>
"Intercompany Loan Documents" shall mean, collectively,
the promissory notes and all related loan, subordination, and other
agreements relating in any manner to the Intercompany Loans.
"Intercompany Loans" shall mean, collectively, (i) the
loans more particularly described on Schedule 7.20 and (ii) those loans
or other extensions of credit made by any Consolidated Company to another
Consolidated Company satisfying the terms and conditions set forth in
Section 9.01(h) or as may otherwise be approved in writing by the Co-
Agents; provided that, the advances made pursuant to the Receivables
Subordinated Notes shall not constitute Intercompany Loans.
"Interest Coverage Ratio" shall mean the ratio of Con-
solidated EBITA to Consolidated Interest Expense.
"Interest Period" shall have the meaning set forth in
Section 5.04.
"Interest Rate Contracts" shall mean any forward con-
tracts, futures contracts, interest rate exchange agreements, interest
rate cap agreements, interest rate collar agreements, and other similar
agreements and arrangements entered into by any Consolidated Company
designed to protect any Consolidated Company against fluctuations in
interest rates.
"Interface" shall mean Interface, Inc., a Georgia corpo-
ration, its successors and permitted assigns.
"Interface SPC" shall mean Interface Securitization
Corporation, a Delaware corporation, the Consolidated Company organized
as a special purpose corporation (i) to acquire accounts receivable from
other Consolidated Companies pursuant to the Receivables Transfer
Agreements, (ii) to sell such accounts receivable (or undivided ownership
interests therein) to SPARCC or CIBC pursuant to the Receivables Sale
Agreements, and (iii) under certain circumstances, to sell such accounts
receivable (or undivided ownership interests therein) to the Bank
Purchasers pursuant to the Receivables Backup Purchase Agreements, and
such Consolidated Company's successors and permitted assigns.
"Interface Control Debt" shall mean, at any time, debt of
Interface for borrowed money in an aggregate principal amount outstanding
at such time in excess of $10,000,000 which is subject to Change in
Control Provisions, excluding debt of Interface arising under this
Agreement or the 1997 Term Loan Agreement or any Guaranty or Security
Document of Interface delivered pursuant to this Agreement or the 1997
Term Loan Agreement.
"Investment" shall mean, when used with respect to any
Person, any direct or indirect advance, loan or other extension of
credit (other than the creation of receivables in the ordinary course of
business) or capital contribution by such Person (by means of transfers
of property to others or payments for property or services for the
account or use of others, or otherwise) to any Person, or any direct or
indirect purchase or other acquisition by such Person of, or of a
beneficial interest in, capital stock, partnership interests, bonds,
notes, debentures or other securities issued by any other Person.
"Invitation for Domestic Bid Rate Quote" shall mean an
invitation from Interface to each of the Domestic Syndicated Lenders to
submit Domestic Bid Rate Quotes offering to make Domestic Bid Rate Loans,
- 19 -<PAGE>
substantially in the form of Exhibit P hereto and transmitted by the
Domestic Agent in accordance with Section 3.06(c)(2).
"Invitation for Multicurrency Bid Rate Quote" shall mean
an invitation from or on behalf of a Multicurrency Borrower to each of
the Multicurrency Syndicated Lenders to submit Multicurrency Bid Rate
Quotes offering to make Multicurrency Bid Rate Loans, substantially in
the form of Exhibit S hereto and transmitted by the Multicurrency Agent
in accordance with Section 4.06(c)(2).
"L/C Account Party" shall mean any Consolidated Company
for whose account a Letter of Credit has been issued pursuant to the
Letter of Credit Agreement.
"L/C Cash Collateral Account" shall mean the cash col-
lateral account established pursuant to the L/C Cash Collateral
Assignment (and designated thereunder as the L/C Cash Collateral Account)
in favor of the Collateral Agent.
"L/C Cash Collateral Assignment" shall mean the Amended
and Restated L/C Cash Collateral Assignment Agreement among those
Consolidated Companies that are parties to the Letter of Credit Agreement
and the Collateral Agent, substantially in the form of Exhibit W, as the
same may hereafter be further amended, restated or supplemented from time
to time.
"L/C Exposure" shall mean, for each Lender, and with
respect to all Letters of Credit as to which it was a Participating
Lender, the sum, for all such Letters of Credit, of the product of (i)
the L/C Outstandings for each Letter of Credit, multiplied by (ii) such
Lender's applicable L/C Pro Rata Share for such Letter of Credit.
"L/C Issuer" shall mean SunTrust Bank, Atlanta, a Georgia
banking corporation, and each other issuer of a Letter of Credit pursuant
to the Letter of Credit Agreement, and their respective successors and
assigns.
"L/C Outstandings" shall mean, as at any date of deter-
mination with respect to an outstanding Letter of Credit, the sum of (i)
the maximum aggregate amount which at such date of determination is
available to be drawn (assuming conditions for drawing thereunder have
been met) under such Letter of Credit then outstanding, plus (ii) the
aggregate amount of all drawings under such Letter of Credit and honored
by the L/C Issuer not theretofore reimbursed by or on behalf of the L/C
Account Party.
"L/C Pro Rata Share" shall mean, at any time, for each
Participating Lender in respect of a Letter of Credit, the percentage
designated in the Letter of Credit Agreement as such Lender's L/C Pro
Rata Share under the name of such Lender on the respective signature page
for such Lender, in each case as such L/C Pro Rata Share may have been
adjusted pursuant to the terms of the Letter of Credit Agreement as of
the date of issuance of such Letter of Credit.
"L/C Subcommitment" shall mean, at any time for any
Domestic Revolving Lender, the amount of the Letter of Credit
Subcommitment set forth opposite such Domestic Syndicated Lender's name
on the signature page of the Letter of Credit Agreement, as the same may
be adjusted from time to time pursuant to the terms of the Letter of
Credit Agreement.
- 20 -<PAGE>
"Lender" or "Lenders" shall mean STBA, FNBC, the other
banks and lending institutions listed on the signature pages hereof, and
each assignee thereof, if any, pursuant to Section 12.06(c).
"Lending Office" shall mean for each Lender the office
such Lender may designate in writing from time to time to the Borrowers
and the Co-Agents with respect to each Type of Loan.
"Letter of Credit" shall mean any letter of credit issued
by the L/C Issuer for the account of an L/C Account Party pursuant to the
Letter of Credit Agreement, as the same may be amended, extended or re-
issued from time to time.
"Letter of Credit Agreement" shall mean the Amended and
Restated Letter of Credit Agreement among Interface, Interface Interior
Fabrics, Inc. (formerly Guilford of Maine, Inc.), Interface Flooring
Systems, Inc., Bentley, Prince Street, Pandel, Inc., Interface Research
Corporation, Rockland React-Rite, Inc., Interface Architectural
Resources, Inc. (formerly C-Tec, Inc.), SunTrust Bank, Atlanta, as L/C
Issuer, the Domestic Syndicated Lenders, the Domestic Agent, and the Col-
lateral Agent, substantially in the form of Exhibit V, as the same may
hereafter be further amended, restated or supplemented from time to time.
"Leverage Ratio" shall mean the ratio, expressed as a
percentage, of Funded Debt to Total Capitalization for the Consolidated
Companies.
"LIBOR" shall mean, for any applicable Interest Period:
(i) with respect to Eurodollar Advances under the
Domestic Syndicated Loan Commitments or the Term Loans,
the offered rate for deposits in Dollars, for a period
comparable to the Interest Period and in an amount
comparable to the Domestic Agent's portion of such
Advances, appearing on Telerate Page 3750 as of 11:00 A.M.
(London, England time) on the day that is two Business
Days prior to the first day of the Interest Period. If
two or more of such rates appear on Telerate Page 3750,
the rate shall be the arithmetic mean of such rates. If
the foregoing rate is unavailable from Telerate Page 3750
for any reason, then such rate shall be determined by the
Domestic Agent from the Reuters Screen LIBO Page or, if
such rate is also unavailable on such service, then on any
other interest rate reporting service of recognized
standing designated in writing by the Domestic Agent to
Interface and the other Lenders;
(ii) with respect to Eurocurrency Advances under the
Multicurrency Syndicated Loan Commitments, the offered
rate for deposits in the applicable Currency, for a period
comparable to the Interest Period and in an amount
comparable to the Multicurrency Agent's portion of such
Advances, appearing on Telerate Page 3750 as of 11:00 A.M.
(London, England time) on the day that is two Business
Days prior to the first day of the Interest Period. If
the foregoing rate is unavailable from Telerate for any
reason, then such rate shall be determined by the
Multicurrency Agent from any other interest rate reporting
service of recognized standing designated in writing by
the Multicurrency Agent to Interface and the other
Lenders;
- 21 -<PAGE>
in any such case rounded, if necessary, to the next higher 1/16 of 1.0%,
if the rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest,
lien, charge, hypothecation, assignment, deposit arrangement, title
retention, preferential right, trust or other arrangement having the
practical effect of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease
or other title retention agreement.
"Loans" shall mean, collectively, the Term Loans, the Domestic
Syndicated Loans, the Domestic Swing Line Loans, the Domestic Bid Rate
Loans, the Multicurrency Syndicated Loans, the Multicurrency Swing Line
Loans, and the Multicurrency Bid Rate Loans.
"Margin Regulations" shall mean Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time.
"Material Company" shall mean (i) Interface, (ii) each Material
Subsidiary, and (iii) each joint venture, general partnership,
association, or other business entity in which one or more of the
Consolidated Companies is a general partner, party, or member, and as to
which such Consolidated Company or Companies has become liable, either by
agreement, by operation of law, or otherwise, for obligations and
liabilities thereof in an aggregate amount greater than $10,000,000.
"Material Subsidiary" shall mean (i) each Credit Party other
than Interface, (ii) each other Consolidated Company listed in the
definition of the term "Pledged Stock" in this Section 1.01, but
excluding Guilford of Maine (Canada), Inc., Interface Heuga Singapore Pte
Ltd., Interface Heuga Hong Kong Ltd., and Interface Heuga Australia Pty
Ltd., and (iii) each other Subsidiary of Interface, now existing or
hereafter established or acquired, that at any time prior to the Term
Loan Final Maturity Date or Revolver/Multicurrency Maturity Date
(whichever is last to occur), has or acquires total assets in excess of
$10,000,000, or that holds any assets material to the operations or
business of another Material Subsidiary (including, without limitation,
each of Guilford of Maine (U.K.) Ltd., Guilford of Maine (Canada), Inc.,
Interface Heuga Singapore Pte Ltd., Interface Heuga Hong Kong Ltd., and
Interface Heuga Australia Pty Ltd., at such time, if any, as any of them
acquires total assets in excess of $10,000,000 or holds such material
assets).
"Materially Adverse Effect" shall mean any materially adverse
change in (i) the business, results of operations, financial condition,
assets or prospects of the Consolidated Companies, taken as a whole, or
(ii) the ability of Interface to perform its respective obligations under
the Credit Documents.
"Multicurrency Agent" shall mean FNBC, acting in the manner and
to the extent described in Article XI, and any successor multicurrency
agent appointed from time to time pursuant to Article XI hereof.
"Multicurrency Bid Rate" shall mean the rate of interest
specified by a Multicurrency Syndicated Lender in its Multicurrency Bid
Rate Quote as provided in Section 4.06(c)(3).
"Multicurrency Bid Rate Acceptance Notice" shall mean the
notice given by or on behalf of a Multicurrency Borrower to the
Multicurrency Agent accepting one or more Multicurrency Bid Rate Quotes
as provided in Section 4.06(c)(5).
- 22 -<PAGE>
"Multicurrency Bid Rate Advance" shall mean a Borrowing in U.S.
Dollars pursuant to Section 4.06 consisting of the aggregate amount of
one or more Multicurrency Bid Rate Loans made by one or more of the
Multicurrency Syndicated Lenders to the same Borrower at the same time,
on the same interest rate basis, and for the same Interest Period.
"Multicurrency Bid Rate Borrowing" shall mean a Borrowing in
U.S. Dollars consisting or to consist of a Multicurrency Bid Rate
Advance.
"Multicurrency Bid Rate Facility" shall mean the credit
facility being made available by the Multicurrency Syndicated Lenders to
the Multicurrency Borrowers as described in Section 4.06(a).
"Multicurrency Bid Rate Lender" shall mean a Multicurrency
Syndicated Lender making one or more Multicurrency Bid Rate Loans
pursuant to Section 4.06.
"Multicurrency Bid Rate Loans" shall mean, collectively, the
loans made to the Multicurrency Borrowers by the Multicurrency Bid Rate
Lenders pursuant to Section 4.06.
"Multicurrency Bid Rate Note" shall mean the promissory notes
evidencing the Multicurrency Bid Rate Loans in the form attached hereto
as Exhibit N and duly completed in accordance with the terms hereof.
"Multicurrency Bid Rate Quote" shall mean an offer or offers by
a Multicurrency Syndicated Lender to make one or more Multicurrency Bid
Rate Loans to a Multicurrency Borrower substantially in the form of
Exhibit T hereto completed and delivered by such Multicurrency Syndicated
Lender to the Multicurrency Agent in accordance with Section 4.06(c)(3).
"Multicurrency Bid Rate Quote Request" shall mean a request
transmitted by or on behalf of a Multicurrency Borrower to the
Multicurrency Agent for offers from the Multicurrency Syndicated Lenders
to make Multicurrency Bid Rate Loans substantially in the form of Exhibit
R hereto completed and delivered to the Domestic Agent in accordance with
Section 4.06(c)(1).
"Multicurrency Borrowers" shall mean, collectively, Interface,
Europe B.V. and Europe Limited.
"Multicurrency Revolving Loans" shall mean, collectively, all
Multicurrency Syndicated Loans, Multicurrency Swing Line Loans, and
Multicurrency Bid Rate Loans.
"Multicurrency Swing Line Advance" shall mean a Borrowing in
U.S. Dollars pursuant to Section 4.05 consisting of a Multicurrency Swing
Line Loan (which may be made either as a Base Rate Advance or as a
Multicurrency Transaction Rate Advance) made by the Multicurrency Swing
Line Lender to a Multicurrency Borrower on the same date and interest
rate basis and, if made as a Fixed Rate Advance, for the same Interest
Period.
"Multicurrency Swing Line Borrowing" shall mean a Borrowing in
U.S. Dollars consisting or to consist of a Multicurrency Swing Line
Advance.
"Multicurrency Swing Line Borrowing Notice" shall mean the
notice given by or on behalf of a Multicurrency Borrower to the
Multicurrency Agent requesting a Multicurrency Swing Line Advance as
provided in Section 4.05(c).
- 23 -<PAGE>
"Multicurrency Swing Line Commitment" shall mean the commitment
of the Multicurrency Swing Line Lender to make Multicurrency Swing Line
Loans in an aggregate principal amount at any time outstanding not to
exceed $5,000,000.
"Multicurrency Swing Line Loans" shall mean, collectively, the
loans made to the Multicurrency Borrowers by the Multicurrency Swing Line
Lender pursuant to Section 4.05.
"Multicurrency Swing Line Notes" shall mean the promissory
notes evidencing the Multicurrency Swing Line Loans substantially in the
form of Exhibits M-1, M-2, and M-3 and duly completed in accordance with
the terms hereof.
"Multicurrency Syndicated Advance" shall mean a Borrowing
pursuant to Section 4.02 consisting of the aggregate amount of
Multicurrency Syndicated Loans made by the Multicurrency Syndicated
Lenders to a Multicurrency Borrower at the same time, on the same
interest rate basis and, if made as a Fixed Rate Advance, for the same
Interest Period.
"Multicurrency Syndicated Borrowing" shall mean a Borrowing
consisting or to consist of a Multicurrency Syndicated Advance.
"Multicurrency Syndicated Borrowing Notice" shall mean the
notice given by or on behalf of a Multicurrency Borrower to the
Multicurrency Agent requesting one or more Multicurrency Syndicated
Advances as provided in Section 4.02(c).
"Multicurrency Syndicated Facility" shall mean the credit
facility made available by the Multicurrency Syndicated Lenders to the
Multicurrency Borrowers as described in Section 4.02(a).
"Multicurrency Syndicated Lenders" shall mean, collectively,
the Lenders extending the Multicurrency Syndicated Loan Commitments to
the Multicurrency Borrowers pursuant to Section 4.02(a).
"Multicurrency Syndicated Loan Commitments" shall mean, at any
time for any Multicurrency Syndicated Lender, the amount of such
commitment set forth opposite such Multicurrency Syndicated Lender's name
on the signature pages hereof, as the same may be increased or decreased
from time to time as a result of any reduction thereof pursuant to
Section 4.03, any assignment thereof pursuant to Section 12.06, or any
amendment thereof pursuant to Section 12.02.
"Multicurrency Syndicated Loans" shall mean, collectively, the
loans made to a Multicurrency Borrower by the Multicurrency Syndicated
Lenders pursuant to Section 4.02.
"Multicurrency Syndicated Notes" shall mean, collectively, the
promissory notes evidencing the Multicurrency Syndicated Loans in the
forms attached hereto as Exhibits C-1, C-2 and C-3, duly completed in
accordance with the terms hereof.
"Multicurrency Transaction Rate" shall mean the rate of
interest specified by the Multicurrency Swing Line Lender to a
Multicurrency Borrower, or to Interface on behalf of a Multicurrency
Borrower, as the case may be, as being applicable to a Multicurrency
Swing Line Loan requested by or on behalf of a Multicurrency Borrower
pursuant to Section 4.05(c).
"Multicurrency Transaction Rate Advance" shall mean an Advance
made or outstanding as a Multicurrency Swing Line Loan bearing interest
- 24 -<PAGE>
based on the Multicurrency Transaction Rate as provided in Section
5.03(b)(iii).
"Multicurrency Transaction Rate Quote" shall mean an offer by
the Multicurrency Swing Line Lender to make a Multicurrency Swing Line
Loan to Interface, Scherpenzeel B.V. or Europe Limited at the
Multicurrency Transaction Rate specified therein for the Interest Period
to be applicable to the Multicurrency Swing Line Loan as specified
therein, pursuant to Section 4.05(c).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any Asset Sale, all
cash, including (i) cash receivables (when received) by way of deferred
payment pursuant to a promissory note, a receivable or otherwise (other
than interest payable thereon), and (ii) with respect to Asset Sales
resulting from the loss, damage, destruction or taking of property, the
proceeds of insurance settlements and condemnation awards (other than the
portion of the proceeds of such settlements and such awards that are used
to repair, replace, improve or restore the item of property in respect of
which such settlement or award was paid provided that the recipient of
such proceeds enters into a binding contractual obligation to effect such
repair, replacement, improvement or restoration within eighteen (18)
months of such loss, damage or destruction and completes such repair,
replacement, improvement or restoration within thirty-six (36) months of
such loss, damage, destruction or taking) as and when received in cash,
in either case, received by any Consolidated Company as a result of or in
connection with such transaction, net of reasonable sale expenses, fees
and commissions incurred, and taxes paid or expected to be payable within
the succeeding 36-month period in connection therewith, and net of any
payment required to be made with respect to the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness
(other than the Loans) secured by a Lien (to the extent permitted by
Section 9.02) upon the asset sold in such Asset Sale.
"1996 Reorganization Credit Parties" shall mean, collectively,
Guilford of Maine, Inc., a Nevada corporation, Guilford of Maine
Finishing Services, Inc., a Nevada corporation, Guilford of Maine
Decorative Fabrics, Inc., a Nevada corporation, Guilford of Maine
Marketing Co., a Nevada corporation, Intek Marketing Co., a Nevada
corporation, Interface Holding Company, a Nevada corporation, Interface
Americas, Inc., a Georgia corporation, Interface Americas Services, Inc.,
a Georgia corporation, Interface Specialty Resources, Inc., a Nevada
corporation, Re:Source Americas Enterprises, Inc., a Georgia corporation,
Interface Royalty Company, a Nevada corporation, Interface Licensing
Company, a Nevada corporation, Prince Street Royalty Company, a Nevada
corporation, Bentley Royalty Company, a Nevada corporation,
Superior/Reiser Flooring Resources, Inc., a Texas corporation, Quaker
City International, Inc., a Pennsylvania corporation, Commercial Flooring
Systems, Inc., a Pennsylvania corporation, Congress Flooring Corp., a
Massachusetts corporation, and their respective successors and permitted
assigns.
"1996 Reorganization Transactions" shall mean those
transactions more particularly described on Schedule 1.01 attached hereto
and by this reference made a part hereof.
"1997 Term Lenders" shall mean the banks and other financial
institutions listed on the signature pages of the 1997 Term Loan
Agreement, their successors and assigns, and each other bank and
financial institution that becomes a party thereto.
- 25 -<PAGE>
"1997 Term Loan Agreement" shall mean the Term Loan Agreement
dated as of June 25, 1997, among Interface, SunTrust Bank, Atlanta, as
Administrative Agent and Collateral Agent, FNBC, as Syndication Agent,
and the 1997 Term Lenders, as the same may be amended, restated, or
supplemented from time to time, pursuant to which the 1997 Term Loans
shall be made to Interface.
"1997 Term Loans" shall mean, collectively, the term loans in
an aggregate principal amount of $75,000,000 made to Interface by the
1997 Term Lenders pursuant to the terms of the 1997 Term Loan Agreement.
"Notes" shall mean, collectively, the Term Notes, the Domestic
Syndicated Notes, the Domestic Swing Line Note, the Domestic Bid Rate
Notes, the Multicurrency Syndicated Notes, the Multicurrency Swing Line
Notes, and the Multicurrency Bid Rate Notes.
"Notice of Domestic Conversion/Continuation" shall mean the
notice given by Interface to the Domestic Agent in respect of the
conversion or continuation of an outstanding Domestic Syndicated
Borrowing as provided in Section 3.02(e).
"Notice of Multicurrency Conversion/Continuation" shall mean a
notice given by or on behalf of a Multicurrency Borrower in respect of
the conversion or continuation of an outstanding Multicurrency Syndicated
Borrowing pursuant to Section 4.02(e).
"Notice of Term Loan Conversion/Continuation" shall mean a
notice given by Interface to the Domestic Agent in respect of the
conversion or continuation of an outstanding portion of the Term Loans
pursuant to Section 2.01(c).
"Obligations" shall mean all amounts owing to any Co-Agent,
Lender, L/C Issuer, or Collateral Agent pursuant to the terms of this
Agreement, the Letter of Credit Agreement, or any other Credit Document,
including without limitation, all Loans (including all principal and
interest payments due thereunder), fees, expenses, indemnification and
reimbursement payments, indebtedness, liabilities, and obligations of the
Credit Parties, direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising, together with all renew-
als, extensions, modifications or refinancings thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Participating Lender" shall have the meaning specified for
such term in the Letter of Credit Agreement.
"Payment Office" shall mean (i) with respect to payments of
principal and interest relating to Multicurrency Syndicated Loans out-
standing in Currencies other than Dollars, the respective FCB Accounts
designated for such Currencies, (ii) with respect to payments of all
other principal, interest, fees or other amounts relating to the
Multicurrency Syndicated Loans, Multicurrency Swing Line Loans, and
Multicurrency Bid Rate Loans, the office specified as the "Payment
Office" for the Multicurrency Agent on the signature page of the
Multicurrency Agent, or such other location as to which the Multicurrency
Agent shall have given written notice to the Borrowers and its Co-Agent,
and (iii) with respect to payments of principal, interest, fees or other
amounts relating to the Domestic Revolving Loans, Domestic Bid Rate
Loans, the Term Loans, and all other Obligations not described in the
preceding clauses (i) and (ii), the office specified as the "Payment
- 26 -<PAGE>
Office" for the Domestic Agent on the signature page of the Domestic
Agent, or such other location as to which the Domestic Agent shall have
given written notice to Interface and its Co-Agent.
"Permitted Liens" shall mean those Liens expressly permitted by
Section 9.02.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, limited liability company, trust
or other entity, or any government or political subdivision or agency,
department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA), including, but not limited to, any defined
benefit pension plan, profit sharing plan, money purchase pension plan,
savings or thrift plan, stock bonus plan, employee stock ownership plan,
Multiemployer Plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical), hospitaliza-
tion, accident, sickness, disability, or life insurance benefits, but
shall exclude any Foreign Plan.
"Pledge Agreements" shall mean, collectively, that certain
Consolidated Amended and Restated Pledge and Security Agreement, that
certain Amended and Restated Agreement of Pledge, and that certain
Amended and Restated Deed of Pledge, executed in favor of the Collateral
Agent, substantially in the forms of Exhibits E-1 through E-3 and the
Pledge and Security Agreement executed by Interface Asia-Pacific, Inc.,
being amended by that certain 1997 Amendment to Pledge and Security
Agreement substantially in the form of Exhibit E-4, in each case
providing for the grant of first priority Liens on the Pledged Stock, as
the same may be further supplemented, amended or restated from time to
time.
"Pledged Stock" shall mean, collectively, (i) all issued and
outstanding capital stock, together with all warrants, stock options, and
other purchase and conversion rights with respect to such capital stock,
of each of Interface Interior Fabrics, Inc. (formerly 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, Intek, Inc., Toltec Fabrics, Inc., Interface Architectural
Resources, Inc. (formerly C-Tec, Inc.), Flooring Consultants, Inc.,
Lasher/White Carpet Company, Inc., B. Shehadi & Sons, Inc., the 1996
Reorganization Credit Parties, and all other Material Subsidiaries of
Interface organized in the United States, and (ii) 66% of all issued and
outstanding capital stock, together with 66% of all warrants, stock
options, and other purchase and conversion rights with respect to such
capital stock, of Europe Limited, Interface Europe B.V., Interface Heuga
Singapore Pte Ltd., Guilford of Maine (Canada), Inc., Interface Flooring
Systems (Canada), Inc., Interface Heuga Hong Kong Ltd., Interface Heuga
Australia Pty Limited, and all other Material Subsidiaries that are
Foreign Subsidiaries directly owned by Interface and/or one or more other
Subsidiaries organized in the United States.
"Prince Street" shall mean Prince Street Technologies, Ltd., a
Georgia corporation.
"Prince Street Acquisition" shall mean the acquisition by
Interface of Prince Street through the consummation of the transactions
described in the Prince Street Acquisition Agreement.
- 27 -<PAGE>
"Prince Street Acquisition Agreement" shall mean the
Acquisition Agreement dated as of December 3, 1993, among Interface,
Robert S. Weiner, Randall J. Hatch, Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton Corp., Prince Street Holding Company,
Steven C. Andrade, and Robert D. Williams, as amended.
"Pro Rata Share" shall mean, with respect to each of the
Domestic Syndicated Loan Commitments (including, without limitation the
L/C Subcommitments) and Multicurrency Syndicated Loan Commitments of each
Domestic Syndicated Lender or Multicurrency Syndicated Lender, as the
case may be, and each Loan to be made by and each payment (including,
without limitation, any payment of principal, Letter of Credit
reimbursement obligation, interest or fees) to be made to each such
Lender, the percentage designated as such Lender's Pro Rata Share of such
Commitments, such Loans or such payments, as applicable, set forth under
the name of such Lender on the respective signature page for such Lender,
in each case as such Pro Rata Share may change from time to time as a
result of assignments, amendments, or reductions made pursuant to this
Agreement.
"Receivables Backup Purchase Agreements" shall mean the
agreements among Interface SPC, as seller, Interface, as collection
agent, and the Bank Purchasers, as purchasers, providing for the sale by
Interface SPC, and the purchase by the Bank Purchasers, of accounts
receivable (or undivided ownership interests therein) originated by
certain of the Consolidated Companies, as in effect on December 31, 1996,
and as the same may be amended, restated or supplemented from time to
time.
"Receivables Sale Agreements" shall mean the agreements among
Interface SPC, as seller, Interface, as collection agent, SPARCC, as
purchaser, and CIBC, as servicing agent, providing for the sale by
Interface SPC, and the purchase by SPARCC, of accounts receivable (or
undivided ownership interests therein) originated by certain of the
Consolidated Companies.
"Receivables Subordinated Notes" shall mean any and all
subordinated notes executed by Interface SPC from time to time in favor
of Interface and evidencing advances made from time to time by Interface
to Interface SPC in connection with, and pursuant to the terms of, the
Accounts Receivable Facilities, provided that, the aggregate outstanding
principal balance of such notes shall not at any time exceed $40,000,000.
"Receivables Transfer Agreements" shall mean, collectively, the
agreement(s) between certain of the Consolidated Companies, as
originators, and Interface SPC, as purchaser, providing for the sale by
such Consolidated Companies, and the purchase by Interface SPC, of
accounts receivable originated by such Consolidated Companies.
"Redeemable Capital Stock" shall mean any shares of any class
or series of capital stock that, either by the terms thereof, by the
terms of any security into which it is convertible or exchangeable, or by
contract or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to the Term Loan Final
Maturity Date or is redeemable at the option of the holder thereof at any
time prior to the Term Loan Final Maturity Date, or is convertible into
or exchangeable for debt securities at any time prior to the Term Loan
Final Maturity Date.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in effect
from time to time.
- 28 -<PAGE>
"Required Lenders" shall mean at any time Lenders holding at
least 66-2/3% of the then aggregate amount of the Domestic Syndicated
Loan Commitments, Multicurrency Syndicated Loan Commitments and Term
Loans; provided, however, that in connection with any proposed amendment
or waiver of any of the following provisions, "Required Lenders" shall
mean both the Lenders holding at least 66-2/3% of the then aggregate
amount of the Domestic Syndicated Commitments, Multicurrency Syndicated
Loan Commitments, and Term Loans, and Multicurrency Syndicated Lenders
holding at least 66-2/3% of the then aggregate amount of the
Multicurrency Syndicated Loan Commitments: (i) Article IV,
(ii) Section 5.03(b), Section 5.07(b)(v) and (viii), and Section 5.13, or
(iii) the definitions of the terms Currency, Payment Office, FCB Account
or FC Bank.
"Required Multicurrency Syndicated Lenders" shall have the
meaning provided in Section 12.02.
"Requirement of Law" for any person shall mean the articles or
certificate of incorporation and bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter
Monitor Money Rates Service (or such other page as may replace that page
on that service for the purpose of displaying rates comparable to LIBOR).
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 X.
"SPARCC" shall mean Special Purpose Accounts Receivable
Cooperative Corporation, its successors and permitted assigns.
"Security Documents" shall mean, collectively, the Guaranty
Agreements, the Pledge Agreements, the L/C Cash Collateral Assignment,
the IRB Collateral Documents, the Indemnity Agreement, and each other
guaranty agreement, mortgage, deed of trust, security agreement, pledge
agreement, or other security or collateral document guaranteeing or
securing the Obligations, as the same may be amended, restated, or
supplemented from time to time.
"Senior Funded Debt" shall mean Funded Debt minus Subordinated
Debt.
"Senior Subordinated Notes" shall mean, collectively, the
unsecured Senior Subordinated Notes Due 2005 issued by Interface, and
guaranteed by certain Subsidiaries of Interface, in the aggregate
principal amount of $125,000,000 (plus the aggregate principal amount, if
any, of such Senior Subordinated Notes issued pursuant to the
underwriters' over-allotment option up to a total amount of $18,750,000),
as more particularly described on the Senior Subordinated Notes
Description, together with any and all "Exchange Notes" (as defined in
the Senior Subordinated Notes Description) issued to holders of such
Senior Subordinated Notes in exchange therefor.
- 29 -<PAGE>
"Senior Subordinated Notes Description" shall mean the
description of the Senior Subordinated Notes as set forth in Exhibit X
attached hereto and by this reference made a part hereof.
"Senior Subordinated Notes Guarantor" shall mean each
Subsidiary of Interface that is a "Guarantor" with respect to the Senior
Subordinated Notes as provided in the Senior Subordinated Notes
Indenture.
"Senior Subordinated Notes Indenture" shall mean the Indenture
dated as of November 15, 1995, by and among Interface, Bentley, Guilford
(Delaware), Inc., Guilford of Maine, Inc., Interface Asia-Pacific, Inc.,
Interface Europe, Inc., Interface Flooring Systems, Inc., Interface
Research Corporation, Pandel, Inc., Prince Street, Rockland React-Rite,
Inc., and First Union National Bank of Georgia, pursuant to which
Interface issued its Senior Subordinated Notes, as the same has been or
may hereafter be amended or supplemented from time to time.
"Shareholders' Equity" shall mean, with respect to any Person
as at any date of determination, shareholders' equity of such Person
determined on a consolidated basis in conformity with GAAP.
"Significant Subsidiary" shall have the same meaning as in Rule
1.02(v) of Regulation S-X under the Securities Act of 1933, as amended.
"Special Adjusted LIBO Rate" shall mean the sum of (i) the rate
obtained by dividing (A) Special LIBOR as in effect from time to time by
(B) a percentage equal to 1 minus the then stated maximum rate (stated as
a decimal) of all reserves requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or against any
successor category of liabilities as defined in Regulation D), plus
(ii) if the relevant Eurocurrency Advance is in British pounds sterling,
a percentage sufficient to compensate the Multicurrency Syndicated
Lenders for the cost of complying with any reserves, liquidity and/or
special deposit requirements of the Bank of England directly or
indirectly affecting the maintenance or funding of such Advances.
"Special LIBOR" shall mean the rate of interest per annum as
determined by the Multicurrency Agent (rounded, if necessary, to the next
higher multiple of 1/16%) at which overnight or weekend deposits of the
appropriate Currency (or if such amount remains unpaid for more than
three Business Days, then for such other period of time not longer than
three months as the Multicurrency Agent may select in its absolute
discretion) for delivery in immediately available and transferable funds
would be offered by the Multicurrency Agent to major banks in the London
interbank market upon request of such major banks for the applicable
period as determined above and in an amount comparable to the
Multicurrency Agent's portion of the unpaid Obligations bearing interest
at such rate (or, if the Multicurrency Agent is not placing such deposits
in such Currency in the London interbank market, then the Multicurrency
Agent's cost of funds in such Currency for such period).
"Subordinated Debt" shall mean (i) Indebtedness outstanding
pursuant to the Senior Subordinated Notes, and (ii) other Indebtedness of
Interface subordinated to all obligations of Interface or any other
Credit Party arising under this Agreement, the Notes, and the Guaranty
Agreements on terms and conditions satisfactory in all respects to the
Co-Agents and the Required Lenders, including without limitation, with
respect to interest rates, payment terms, maturities, amortization
schedules, covenants, defaults, remedies, and subordination provisions,
as evidenced by the written approval of the Co-Agents and the Required
Lenders.
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"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships,
joint ventures, and associations) regardless of its jurisdiction of
organization or formation, at least a majority of the total combined
voting power of all classes of voting stock or other ownership interests
of which shall, at the time as of which any determination is being made,
be owned by such Person, either directly or indirectly through one or
more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other
charges of whatever nature, including without limitation, income,
receipts, excise, property, sales, transfer, license, payroll,
withholding, social security and franchise taxes now or hereafter imposed
or levied by the United States, or any state, local or foreign government
or by any department, agency or other political subdivision or taxing
authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and the Certificate of Deposit Rate or LIBOR, the display
page so designated on the Dow Jones Telerate Service (or such other page
as may replace that page on that service for the purpose of displaying
rates comparable to the Certificate of Deposit Rate or LIBOR).
"Term Lenders" shall mean, collectively, those Lenders
extending the Term Loans to Interface pursuant to Section 2.01(a).
"Term Loan Commitment" shall mean, at any time for any Term
Lender, the amount of such commitment set forth opposite such Lender's
name on the signature pages hereof, as the same may be increased or
decreased from time to time as a result of any repayment of the Term
Loans, any assignment thereof pursuant to Section 12.06, or any amendment
thereof pursuant to Section 12.02.
"Term Loan Final Maturity Date" shall mean the earlier of (i)
December 29, 2000, and (ii) the date on which all amounts outstanding
under this Agreement have been declared or have automatically become due
and payable pursuant to the provisions of Article X.
"Term Loans" shall mean, collectively, the term loans in the
original aggregate principal amount of $50,000,000 made to Interface by
the Term Lenders on January 9, 1995 pursuant to Section 2.01(a), to be
reduced to an aggregate principal amount outstanding of $25,000,000 on
the Closing Date.
"Term Notes" shall mean, collectively, the promissory notes
evidencing the Term Loans substantially in the form of Exhibit A and duly
completed in accordance with the terms hereof.
"Total Capitalization" shall mean the sum of Funded Debt and
Consolidated Net Worth for the Consolidated Companies.
"Total Commitment" shall mean, for any Lender at any time, the
sum of such Lender's Term Loan Commitment, Domestic Syndicated Loan
Commitment, and Multicurrency Syndicated Loan Commitment and, in the case
of the Domestic Swing Line Lender or Multicurrency Swing Line Lender, as
the case may be, its Domestic Swing Line Commitment or Multicurrency
- 31 -<PAGE>
Swing Line Commitment, as applicable; and "Total Commitments" shall mean,
for all Lenders at any time, the sum of the Total Commitment of all
Lenders.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances, CD Rate Advances, Euro Advances, Domestic Bid Rate
Advances, Domestic Transaction Rate Advances, Multicurrency Bid Rate
Advances, and Multicurrency Transaction Rate Advances.
Section 1.02. Accounting Terms and Determination. Unless
otherwise defined or specified herein, all accounting terms shall be
construed herein, all accounting determinations hereunder shall be made,
all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained in accordance
with, GAAP, except that financial records of Foreign Subsidiaries may be
maintained in accordance with generally accepted accounting principles in
effect from time to time in the jurisdiction of organization of such
Foreign Subsidiary; provided, however, that compliance with the financial
covenants and calculations set forth in Section 8.09, Article IX, and
elsewhere herein, and in the definitions used in such covenants and
calculations, shall be calculated, made and applied in accordance with
GAAP and such generally accepted accounting principles in such foreign
jurisdictions, as the case may be, as in effect on the date of this
Agreement applied on a basis consistent with the preparation of the
financial statements referred to in Section 7.14 unless and until the
parties enter into an agreement with respect thereto in accordance with
Section 12.13; and provided, further, that for purposes of such financial
covenants and calculations, the Convertible Preferred Stock shall be
considered as capital stock of Interface and not as Funded Debt.
Section 1.03. Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section, Schedule,
Exhibit and like references are to this Agreement unless otherwise
specified.
Section 1.04. Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II.
TERM LOANS
Section 2.01. Amount of Term Loans; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set
forth, each Term Lender has made to Interface on January 9, 1995, a Term
Loan in an amount equal to its Term Loan Commitment, such Term Loans to
be repaid as set forth in Section 2.02(b). On the Closing Date,
Interface agrees to repay an aggregate principal portion of the
outstanding Term Loans equal to $25,000,000, together with interest
accrued and unpaid thereon to the date of payment, and all compensation
payments, if any are due, pursuant to Section 5.12. Such payments shall
be applied as provided in Section 5.06(c) below. Interface shall not be
entitled to reborrow any amounts repaid with respect to the Term Loans.
(b) Each Term Loan shall, at the option of Interface, be made
or continued as, or converted into, part of one or more Borrowings that
shall consist entirely of Base Rate Advances, CD Rate Advances, or
Eurodollar Advances. The aggregate principal amount of each Borrowing of
Term Loans consisting of CD Rate Advances or Eurodollar Advances shall be
- 32 -<PAGE>
not less than $1,000,000 or a greater integral multiple of $100,000, and
the aggregate principal amount of each Borrowing of Term Loans consisting
of Base Rate Advances shall not be less than $300,000 or a greater
integral multiple of $100,000. At no time shall the number of Borrowings
outstanding under the Term Loans exceed eight in either case; provided
that, for the purpose of determining the number of Borrowings outstanding
and the minimum amount for Borrowings resulting from conversions or
continuations, all Borrowings under the Term Loans comprised of Base Rate
Advances shall be considered in each case as one Borrowing.
(c) Whenever Interface desires to convert all or a portion of
an outstanding Borrowing constituting a portion of the Term Loans, which
Borrowing consists of Base Rate Advances, CD Rate Advances or Eurodollar
Advances, into one or more Borrowings consisting of Advances of another
Type, or to continue outstanding a Borrowing consisting of CD Rate
Advances or Eurodollar Advances for a new Interest Period, it shall give
the Domestic Agent at least two (2) Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing
being converted into or continued as CD Rate Advances, and at least three
(3) Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing to be converted into or continued
as Eurodollar Advances. Such notice (a "Notice of Term Loan
Conversion/Continuation") shall be given prior to 11:00 a.m. (Eastern
time) on the date specified. Each such Notice of Term Loan
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Advances to be converted or continued,
the date of such conversion or continuation, whether the Advances are
being converted into or continued as CD Rate Advances or Eurodollar
Advances and (in the case of Fixed Rate Advances) the Interest Period
applicable thereto. If, upon the expiration of any Interest Period in
respect of any Borrowing, Interface shall have failed, or pursuant to the
following sentence be unable, to deliver the Notice of Term Loan
Conversion/Continuation, Interface shall be deemed to have elected to
convert or continue such Borrowing to a Borrowing consisting of Base
Rate Advances. So long as any Default or Event of Default shall have
occurred and be continuing, no Borrowing may be converted into or
continued as (upon expiration of the current Interest Period) Fixed Rate
Advances. No conversion of any Borrowing of Fixed Rate Advances shall be
permitted except on the last day of the Interest Period in respect
thereof.
Section 2.02. Notes; Repayment of Principal.
(a) Interface's obligations to pay the principal of, and
interest on, the Term Loans to each Term Lender shall be evidenced by the
records of the Domestic Agent and such Term Lender and by the respective
Term Note payable to such Term Lender (or the assignor of such Term
Lender) completed in conformity with this Agreement.
(b) Interface shall repay in full all Term Loans outstanding
after the Closing Date, if not sooner paid, on the Term Loan Final
Maturity Date.
Section 2.03. Mandatory Prepayments.
(a) No mandatory prepayment shall be required pursuant to this
Section 2.03(a) until the aggregate amount of Asset Sales occurring after
October 2, 1994 exceeds $10,000,000 (based on the Asset Values thereof,
but excluding in the foregoing computation (i) Asset Sales resulting from
loss, damage, destruction, or taking where the proceeds thereof are
utilized so as to be excluded from the definition of Net Proceeds, and
- 33 -<PAGE>
(ii) Asset Sales occurring as a part of any sale and leaseback
transactions permitted pursuant to Section 9.06). Whenever such Asset
Values shall have equaled or exceeded such amount, the following
prepayments shall be required to be made:
(i) Within ten (10) Business Days after each date on
which any Consolidated Company receives any Net Proceeds
as a result of or in connection with an Asset Sale by any
Consolidated Company, the Term Loans outstanding under
Section 2.01 and the 1997 Term Loans shall be prepaid on a
pro rata basis by an amount equal to forty percent (40%)
of such Net Proceeds (such amount being subject to
adjustment pursuant to paragraph (c) of this Section 2.03)
plus interest accrued and unpaid on the amount of such
prepayment. If immediately prior to any Asset Sale the
aggregate amount of prior Asset Sales (determined as
aforesaid) is less than $10,000,000, but such Asset Sale
causes the $10,000,000 threshold amount to be exceeded,
then forty percent (40%) of a pro rata portion of the Net
Proceeds of such Asset Sale, based upon the ratio of the
amount of the Asset Value of such Asset Sale in excess of
the $10,000,000 threshold to the total Asset Value of such
Asset Sale, shall be applied as set forth in the preceding
sentence; and
(ii) If, within fourteen (14) months following an
Asset Sale described in the preceding clause (i), the
remaining sixty percent (60%) of such Net Proceeds, or pro
rata portion thereof, has neither been (x) invested in
properties and assets that replace the properties and
assets that were the subject of such Asset Sale, or in
properties and assets that will be used in the businesses
of Interface and its Subsidiaries existing on November 1,
1995 or in businesses reasonably related thereto, or
(y) used to prepay the Term Loans outstanding under
Section 2.01 and the 1997 Term Loans or, if the Term Loans
and the 1997 Term Loans have been paid in full, to prepay
the outstanding Domestic Revolving Loans and Multicurrency
Revolving Loans and permanently reduce the Domestic
Syndicated Loan Commitments and Multicurrency Syndicated
Loan Commitments as provided in Section 3.03(b) and
Section 4.03(c), then Interface shall promptly prepay any
and all such remaining amounts (such amounts being subject
to adjustment pursuant to paragraph (c) of this Section
2.03) not so invested or previously prepaid and such
amounts shall be applied as provided in this Section
2.03(a) and/or in Section 3.03(b) and Section 4.03(c) with
the permanent reductions in commitments as provided
therein.
Notwithstanding the foregoing, if all or substantially all of the assets
of any Senior Subordinated Notes Guarantor that is a Significant
Subsidiary, or all of the capital stock of any Senior Subordinated Notes
Guarantor that is a Significant Subsidiary, is sold (including by
issuance or otherwise) by Interface or any of its Subsidiaries to any
Person other than Interface or its wholly owned Subsidiaries, then the
entire amount of the Net Proceeds from such transaction shall immediately
be used to prepay the Term Loans and the 1997 Term Loans on a pro rata
basis, or, if the Term Loans and the 1997 Term Loans have been paid in
full, to prepay the outstanding Domestic Revolving Loans and
Multicurrency Revolving Loans and permanently reduce the Domestic
Syndicated Loan Commitments and Multicurrency Syndicated Loan Commitments
as provided in Section 3.03(b) and Section 4.03(c).
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All such prepayments under this Section 2.03(a) shall be
applied in each case against all remaining scheduled amortization
payments on a pro rata basis, without prejudice, however, to the
provisions of Section 2.03(c). Notwithstanding the limitations on
reductions of the Domestic Syndicated Loan Commitments and Multicurrency
Syndicated Loan Commitments in Section 3.03(b) and Section 4.03(c),
respectively, any reductions in such commitments otherwise required by
this Section 2.03(a) shall be made regardless of whether, after giving
effect to such reductions, such commitments would be less than
$135,000,000 in the aggregate.
(b) On the date Interface delivers its annual financial
statements pursuant to Section 8.07(a), but in no event later than the
date that occurs one hundred twenty (120) days after the last day of each
fiscal year of Interface, the Term Loans outstanding under Section 2.01
and the 1997 Term Loans shall be prepaid on a pro rata basis by an amount
equal to 25% of the Excess Cash Flow, if any, for such fiscal year (such
amount being subject to adjustment pursuant to paragraph (c) of this
Section 2.03) plus interest accrued and unpaid on the amount of such
prepayment. Such prepayment shall be applied in each case to principal
installment payments of the Term Loans and the 1997 Term Loans in the
inverse order of their respective maturities, without prejudice, however,
to the provisions of Section 2.03(c).
(c) Notwithstanding the provisions of paragraphs (a) and (b)
of this Section 2.03, (i) no mandatory prepayment shall be required to be
made under paragraph (a) or (b) of this Section 2.03 if the amount under
paragraph (a) or (b) (including any amount required to be prepaid in
respect of the 1997 Term Loans) is less than $100,000 in any instance,
and (ii) mandatory prepayment amounts otherwise required under said
paragraphs (a) and (b) (including any amount required to be prepaid in
respect of the 1997 Term Loans) shall be rounded to nearest multiple of
$100,000 (such that, for example, if the portion of Net Proceeds required
to be prepaid pursuant to paragraph (a) is $250,000 or more, but less
than $350,000, the mandatory prepayment amount under this Section 2.03
shall equal $300,000 plus interest accrued and unpaid on such amount).
(d) Each mandatory prepayment of Term Loans and 1997 Term
Loans pursuant to this Section 2.03 shall be applied on a pro rata basis
first to Base Rate Advances outstanding under each such series of Term
Loans to the full extent thereof before application to Fixed Rate
Advances outstanding under such series; provided, however, that, so long
as no Default or Event of Default has occurred and is continuing, in lieu
of application of such prepayment to Fixed Rate Advances prior to the
expiration of the respective Interest Periods with respect thereto,
Interface, at its option, may execute an Escrow Letter with respect to
such prepayments and deposit with the Collateral Agent funds equal to
such prepayments for application in accordance with the terms of such
Escrow Letter.
ARTICLE III.
DOMESTIC REVOLVING LOANS
Section 3.01. Description of Domestic Revolving Credit
Facilities. Subject to and upon the terms and conditions herein set
forth (i) the Domestic Syndicated Lenders hereby establish in favor of
Interface a revolving credit facility pursuant to which such Domestic
Syndicated Lenders agree to make Domestic Syndicated Loans to Interface
- 35 -<PAGE>
in accordance with Section 3.02, (ii) the Domestic Swing Line Lender
hereby establishes in favor of Interface a swing line credit facility
pursuant to which the Domestic Swing Line Lender agrees to make Domestic
Swing Line Loans to Interface in accordance with Section 3.05, and (iii)
each Domestic Syndicated Lender may, in its sole discretion, submit bids
to make Domestic Bid Rate Loans to Interface in accordance with Section
3.06; provided, however, that in no event may the aggregate principal
amount of all outstanding Domestic Revolving Loans and the Aggregate L/C
Outstandings exceed at any time the total Domestic Syndicated Loan
Commitments from time to time in effect.
Section 3.02. Domestic Syndicated Loans.
(a) Subject to and upon the terms and conditions herein set
forth (including the limitation set forth in Section 3.01), each Domestic
Syndicated Lender severally agrees to make to Interface, from time to
time prior to the Revolver/Multicurrency Maturity Date, Domestic
Syndicated Loans in an aggregate principal amount outstanding at any time
not to exceed an amount equal to (i) such Domestic Syndicated Lender's
Domestic Syndicated Loan Commitment, minus (ii) such Domestic Syndicated
Lender's L/C Exposure. Interface shall be entitled to repay and reborrow
Domestic Syndicated Loans in accordance with the provisions, and subject
to the limitations, set forth herein (including the limitation set forth
in Section 3.01).
(b) Each Domestic Syndicated Loan shall, at the option of
Interface, be made or continued as, or converted into, part of one or
more Borrowings that shall consist entirely of Base Rate Advances, CD
Rate Advances, or Eurodollar Advances. The aggregate principal amount of
each Borrowing of Domestic Syndicated Loans shall be not less than
$1,000,000 or a greater integral multiple of $100,000, provided that each
Borrowing of Domestic Syndicated Loans comprised of Base Rate Advances
shall be not less than $250,000 or a greater integral multiple of $1000,
except to the extent otherwise provided with respect to Domestic
Syndicated Loans made pursuant to Section 3.02(c)(2). At no time shall
the total number of Borrowings outstanding under this Section 3.02 and
Section 3.06 exceed eight; provided that, for purposes of determining the
number of Borrowings outstanding and the minimum amount for Borrowings
resulting from conversions or continuations, all Borrowings of Base Rate
Advances under this Section 3.02 shall be considered as one Borrowing.
(c) (1) Whenever Interface desires to make a Domestic
Syndicated Borrowing (other than one resulting from a
conversion or continuation pursuant to Section 3.02(e)), it
shall give the Domestic Agent prior written notice (or
telephonic notice promptly confirmed in writing) of such
Domestic Syndicated Borrowing (each a "Domestic Syndicated
Borrowing Notice") prior to 11:00 a.m. (Eastern time) at its
Payment Office (i) one Business Day prior to the requested date
of such Domestic Syndicated Borrowing in the case of Base Rate
Advances, (ii) two Business Days prior to the requested date of
such Domestic Syndicated Borrowing in the case of CD Rate
Advances, and (iii) three Business Days prior to the requested
date of such Domestic Syndicated Borrowing in the case of
Eurodollar Advances. Notices received after 11:00 a.m.
(Eastern time) shall be deemed received on the next Business
Day. Each Domestic Syndicated Borrowing Notice shall be
irrevocable and shall specify the aggregate principal amount of
the Domestic Syndicated Borrowing, the date of the Domestic
Syndicated Borrowing (which shall be a Business Day), and
whether the Domestic Syndicated Borrowing is to be made as a
Base Rate Advance, CD Rate Advance or Eurodollar Advance and,
in the case of a CD Rate Advance or Eurodollar Advance, the
Interest Period to be applicable thereto.
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(2) Whenever there occurs any request or demand for
payment under any Letter of Credit by the beneficiary thereof,
and Interface shall not have notified the Domestic Agent and
the L/C Issuer prior to 11:00 a.m. (Eastern time) on the
Business Day immediately prior to the date on which such
drawing is to be honored that the L/C Account Party or
Interface, on behalf of such L/C Account Party, intends to
reimburse the L/C Issuer for the amount of such drawing with
funds other than the proceeds of Domestic Syndicated Loans, (i)
Interface shall be deemed to have given a Domestic Syndicated
Borrowing Notice to the Domestic Agent requesting a Domestic
Syndicated Borrowing consisting of Base Rate Loans on the date
on which such drawing is to be honored in an amount equal to
the amount of such drawing, and (ii) each Domestic Syndicated
Lender shall, by 1:00 p.m. (Eastern time) on the date of the
honoring of such drawing, make a Domestic Syndicated Loan to
Interface which is a Base Rate Loan in an amount equal to the
product of the amount of such drawing and such Domestic
Syndicated Lender's Pro Rata Share, the proceeds of which shall
be applied directly by the Domestic Agent to reimburse the L/C
Issuer for the amount of such drawing (provided that, solely
for purposes of such Domestic Syndicated Borrowing, the
conditions precedent set forth in Section 6.03 shall not be
applicable to such Domestic Syndicated Borrowing).
(d) No later than 11:00 a.m. (Eastern time) on the date of
each Domestic Syndicated Borrowing (other than one resulting from a
conversion or continuation pursuant to Section 3.02(e)), each Domestic
Syndicated Lender will make available its Pro Rata Share of the amount of
such Domestic Syndicated Borrowing in immediately available funds at the
Payment Office of the Domestic Agent. The Domestic Agent will make
available to Interface the aggregate of the amounts (if any) so made
available by the Domestic Syndicated Lenders to the Domestic Agent in a
timely manner by crediting such amounts to Interface's demand deposit
account maintained with the Domestic Agent. If any Domestic Syndicated
Lender does not make such amount available to the Domestic Agent by the
time prescribed above, but such amount is received later that day, such
amount may be credited to Interface in the manner described in the
preceding sentence on the next Business Day (with interest on such amount
to begin accruing hereunder on such next Business Day).
(e) Whenever Interface desires to convert all or a portion of
an outstanding Domestic Syndicated Borrowing made as a Base Rate Advance,
CD Rate Advance or Eurodollar Advance into one or more Domestic
Syndicated Borrowings consisting of an Advance of another Type, or to
continue outstanding a Domestic Syndicated Borrowing made as a CD Rate
Advance or Eurodollar Advance for a new Interest Period, it shall give
the Domestic Agent at least two (2) Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each such
Domestic Syndicated Borrowing being converted into or continued as a CD
Rate Advance, and at least three (3) Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each such
Domestic Syndicated Borrowing to be converted into or continued as a
Eurodollar Advance. Such notice (each a "Notice of Domestic
Conversion/Continuation") shall be given prior to 11:00 a.m. (Eastern
time) on the date specified. Each such Notice of Domestic
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Advance to be converted or continued,
the date of such conversion or continuation, whether the Advance is being
converted into or continued as a CD Rate Advance or Eurodollar Advance
- 37 -<PAGE>
and (in the case of a CD Rate Advance or a Eurodollar Advance) the
Interest Period to be applicable thereto. If, upon the expiration of any
Interest Period in respect of any Domestic Syndicated Borrowing,
Interface shall have failed, or pursuant to the following sentence be
unable, to deliver the Notice of Domestic Conversion/Continuation,
Interface shall be deemed to have elected to convert or continue such
Domestic Syndicated Borrowing to a Domestic Syndicated Borrowing made as
a Base Rate Advance. So long as any Default or Event of Default shall
have occurred and be continuing, no Domestic Syndicated Borrowing may be
converted into or continued as (upon expiration of the current Interest
Period) a Fixed Rate Advance. No conversion of any Domestic Syndicated
Borrowing made as a Fixed Rate Advance shall be permitted except on the
last day of the Interest Period in respect thereof.
(f) Interface's obligations to pay the principal of, and
interest on, the Domestic Syndicated Loans to each Domestic Syndicated
Lender shall be evidenced by the records of the Domestic Agent and such
Domestic Syndicated Lender and by the Domestic Syndicated Note payable to
such Domestic Syndicated Lender (or the assignor of such Domestic
Syndicated Lender) completed in conformity with this Agreement.
(g) All outstanding principal amounts under the Domestic
Syndicated Loans shall be due and payable in full on the
Revolver/Multicurrency Maturity Date.
Section 3.03. Reductions of Domestic Syndicated Loan
Commitments.
(a) Upon at least three Business Days' prior telephonic notice
(promptly confirmed in writing) to the Domestic Agent, Interface shall
have the right, without premium or penalty, to terminate the Domestic
Syndicated Loan Commitments, in part or in whole, provided that (i) any
such termination shall apply to proportionately and permanently reduce
the Domestic Syndicated Loan Commitments of each of the Domestic
Syndicated Lenders, (ii) any partial termination pursuant to this Section
3.03 shall be in an amount of at least $1,000,000 and integral multiples
of $100,000, and (iii) no such reduction shall be permitted which would
(x) require a prepayment that is not permitted by Section 5.06, or (y)
reduce the Domestic Syndicated Loan Commitments to an amount less than
the sum of (A) the Aggregate L/C Outstandings and (B) the aggregate
principal amount outstanding under the Domestic Revolving Loans.
(b) If any mandatory prepayment shall be due with respect to
the Term Loans pursuant to Section 2.03, but such prepayment cannot be
applied, or an escrow for such prepayment is established as provided in
Section 2.03(d) for application, against the Term Loans, in whole or in
part, because the Term Loans have been, or are then being, paid
(currently or pursuant to such escrow arrangement) in full, then the
Domestic Syndicated Loan Commitments and the Multicurrency Syndicated
Loan Commitments shall automatically and ratably be reduced by an amount
equal to such prepayment or portion thereof which cannot be so applied;
provided, however, that no such reduction pursuant to this Section
3.03(b) shall be required to the extent that the Domestic Syndicated Loan
Commitments and the Multicurrency Syndicated Loan Commitments would be
less than $135,000,000 in the aggregate. Any such reduction of the
Domestic Syndicated Loan Commitments and the Multicurrency Syndicated
Loan Commitments shall apply as a proportional and permanent reduction
with respect to the Domestic Syndicated Loan Commitments and the
Multicurrency Syndicated Loan Commitments of each of the Domestic
Syndicated Lenders and Multicurrency Syndicated Lenders, respectively.
Section 3.04. Mandatory Prepayments of Domestic Revolving
Loans. If the aggregate outstanding principal amount of the Domestic
Revolving Loans and the Aggregate L/C Outstandings exceed at any time the
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amount of the Domestic Syndicated Loan Commitments, as reduced pursuant
to Section 3.03 or otherwise, Interface shall immediately repay the
Domestic Revolving Loans by an amount equal to such excess, together with
all accrued but unpaid interest on such excess amount. Each prepayment
of Domestic Revolving Loans shall be applied first to Base Rate Advances
to the full extent thereof before application to Fixed Rate Advances;
provided, however, that so long as no Default or Event of Default has
occurred and is continuing, in lieu of application of such prepayment to
Fixed Rate Advances prior to the expiration of the respective Interest
Periods with respect thereto, Interface, at its option, may execute an
Escrow Letter with respect to such prepayment and deposit with the
Collateral Agent funds equal to the amount of such prepayment for
application in accordance with the terms of such Escrow Letter.
Section 3.05. Domestic Swing Line Loans.
(a) Subject to and upon the terms and conditions herein set
forth (including the limitation set forth in Section 3.01), the Domestic
Swing Line Lender agrees to make to Interface, from time to time prior to
the Revolver/Multicurrency Maturity Date, Domestic Swing Line Loans in an
aggregate principal amount outstanding at any time not to exceed the
Domestic Swing Line Commitment then in effect. Interface shall be
entitled to repay and reborrow Domestic Swing Line Loans in accordance
with the provisions, and subject to the limitations, set forth herein
(including the limitation set forth in Section 3.01).
(b) Each Domestic Swing Line Loan shall, at the option of
Interface, be made as a Base Rate Advance or Domestic Transaction Rate
Advance. The aggregate principal amount of each Domestic Swing Line
Borrowing shall be not less than $250,000 or a greater integral multiple
of $1,000. At no time shall the number of Domestic Swing Line Borrowings
outstanding under this Section 3.05 exceed three; provided that, for
purposes of determining the number of Domestic Swing Line Borrowings
outstanding, all Domestic Swing Line Borrowings consisting of Base Rate
Advances shall be considered as one Domestic Swing Line Borrowing.
(c) Whenever Interface desires to make a Domestic Swing Line
Borrowing, it shall give the Domestic Swing Line Lender (with a copy to
the Domestic Agent) prior written notice (or telephonic notice promptly
confirmed in writing) of such Domestic Swing Line Borrowing (each a
"Domestic Swing Line Borrowing Notice") prior to 10:00 a.m. (Eastern
time) on the date of such Domestic Swing Line Borrowing. Each Domestic
Swing Line Borrowing Notice shall specify the aggregate principal amount
of the Domestic Swing Line Borrowing, the date of such Domestic Swing
Line Borrowing (which shall be a Business Day), whether a Domestic
Transaction Rate Quote is being requested and, if so, the Interest Period
to be applicable thereto. If Interface requests a Domestic Transaction
Rate Quote as aforesaid, then prior to 12:00 noon (Eastern time) on such
date, the Domestic Swing Line Lender shall furnish Interface (with a copy
to the Domestic Agent) with a quotation of the interest rate being
offered with respect to such Domestic Swing Line Borrowing (whether
expressed as a fixed rate of interest in effect for the Interest Period
applicable thereto or as a floating rate of interest based on a specified
interest rate index and applicable margin for the Interest Period to be
applicable thereto; in either case, a "Domestic Transaction Rate Quote")
by telephone (promptly confirmed in writing) or by facsimile
transmission. Interface shall immediately inform the Domestic Swing Line
Lender (with a copy to the Domestic Agent) of its decision as to whether
to accept the Domestic Transaction Rate Quote and to confirm the Domestic
Swing Line Borrowing (which may be done by telephone, promptly confirmed
in writing, and which decision shall be irrevocable). If Interface has
- 39 -<PAGE>
so informed the Domestic Swing Line Lender and confirmed the terms of the
Domestic Swing Line Borrowing, then no later than 2:00 p.m. (Eastern
time) on such date, the Domestic Swing Line Lender shall make the
principal amount of the Domestic Swing Line Loan available to the
Domestic Agent in immediately available funds at the Payment Office of
the Domestic Agent, and the Domestic Agent will make available to
Interface such amount by crediting such amount to Interface's demand
deposit account maintained with the Domestic Agent. In the event that
the Domestic Swing Line Lender does not make such amount available to the
Domestic Agent at the time prescribed above, but such amount is received
later that day, such amount may be credited to Interface in the manner
described in the preceding sentence on the next Business Day (with
interest on such amount to begin accruing hereunder on such next Business
Day).
(d) Interface's obligations to pay the principal of, and
interest on, the Domestic Swing Line Loans shall be evidenced by the
records of the Domestic Agent and the Domestic Swing Line Lender and by
the Domestic Swing Line Note payable to the Domestic Swing Line Lender
(or the assignor of such Domestic Swing Line Lender) completed in
conformity with this Agreement.
(e) The outstanding principal amount under each Domestic Swing
Line Loan shall be due and payable in full (i) on the expiration of the
Interest Period applicable to such Domestic Swing Line Loan if
outstanding as a Domestic Transaction Rate Advance, and (ii) on the
Revolver/Multicurrency Maturity Date.
(f) At any time on the request of the Domestic Swing
Line Lender, each Domestic Syndicated Lender other than the
Domestic Swing Line Lender shall purchase a participating
interest in all outstanding Domestic Swing Line Loans in an
amount equal to its Pro Rata Share (based upon on its respective
Domestic Syndicated Loan Commitment) of such Domestic Swing Line
Loans, and the Domestic Swing Line Lender shall furnish each
Domestic Syndicated Lender with a certificate evidencing such
participating interest. Such purchase shall be made on the third
Business Day after such request is made; provided, however, that
unless an Event of Default has occurred and is continuing on the
date such request is made, the purchase of a participating
interest in any Domestic Swing Line Loan outstanding as a
Domestic Transaction Rate Advance shall not be required to be
made until the expiration of the current Interest Period in
effect for such Domestic Swing Line Loan. On the date of such
required purchase, each Domestic Syndicated Lender will
immediately transfer to the Domestic Swing Line Lender, in
immediately available funds, the amount of its participation.
Whenever, at any time after the Domestic Swing Line Lender has
received from any such Domestic Syndicated Lender the funds for
its participating interest in a Domestic Swing Line Loan, the
Domestic Agent receives any payment on account thereof, the
Domestic Agent will distribute to such Domestic Syndicated Lender
its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period
of time during which such Domestic Syndicated Lender's
participating interest was outstanding and funded); provided,
however, that if such payment received by the Domestic Agent is
required to be returned, such Domestic Syndicated Lender will
return to the Domestic Agent any portion thereof previously
distributed by the Domestic Agent to it. Each Domestic
Syndicated Lender's obligation to purchase such participating
interests shall be absolute and unconditional and shall not be
affected by any circumstance, including without limitation (i)
any setoff, counterclaim, recoupment, defense or other right that
- 40 -<PAGE>
such Domestic Syndicated Lender or any other Person may have
against the Domestic Swing Line Lender requesting such purchase
or any other Person for any reason whatsoever, (ii) the
occurrence or continuation of a Default or an Event of Default or
the termination of any of the Commitments, (iii) any adverse
change in the condition (financial or otherwise) of Interface,
any of its Consolidated Subsidiaries, or any other Person, (iv)
any breach of this Agreement by Interface, any other Borrower, or
any other Lender, or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing;
provided, however, that no such obligation shall exist (A) to the
extent that the aggregate Domestic Swing Line Loans were advanced
in excess of the Domestic Swing Line Commitment then in effect,
or (B) with respect to any Domestic Swing Line Loan where the
Domestic Swing Line Lender actually advanced to Interface net
proceeds from the Domestic Swing Line Loan (and therefore was not
refunding a previous Domestic Swing Line Loan) at a time when (x)
the Domestic Swing Line Lender had actual knowledge that an Event
of Default had occurred and then existed, and (y) the Required
Lenders had not agreed to waive such Event of Default for
purposes of funding such Domestic Swing Line Loan.
Section 3.06. Domestic Bid Rate Loans.
(a) Subject to and upon the terms and conditions
herein set forth (including the limitation set forth in Section
3.01), Interface may, as set forth in this Section 3.06, request
the Domestic Syndicated Lenders, from time to time prior to the
Revolver/Multicurrency Maturity Date, to make offers to make
Domestic Bid Rate Loans to Interface. Each Domestic Syndicated
Lender may, but shall have no obligation to, make such offers and
Interface may, but shall have no obligation to, accept any such
offers in the manner set forth in this Section 3.06. Interface
shall be entitled to repay and reborrow Domestic Bid Rate Loans
in accordance with the provisions, and subject to the limitations
set forth herein (including the limitation set forth in Section
3.01).
(b) The aggregate principal amount of each Domestic
Bid Rate Borrowing requested by Interface shall be in a principal
amount not less than $5,000,000 or a greater integral multiple of
$1,000,000. At no time shall the number of Borrowings
outstanding under this Section 3.06 and Section 3.02 exceed
eight.
(c) Domestic Bid Rate Loans may be made to Interface
in accordance with the procedures set forth in this Section
3.06(c).
(1) Whenever Interface wishes to request
offers to make Domestic Bid Rate Loans under this
Section 3.06, Interface shall transmit to the
Domestic Agent by facsimile transmission a request
for such offers (each a "Domestic Bid Rate Quote
Request") so as to be received by the Domestic
Agent not later than 10:00 a.m. (Eastern time) on
the third Business Day immediately preceding the
date of the proposed Domestic Bid Rate Borrowing,
specifying (i) the date of the Domestic Bid Rate
Borrowing (which shall be a Business Day), (ii)
the aggregate principal amount of the Domestic Bid
- 41 -<PAGE>
Rate Borrowing, and (iii) the Interest Period to
be applicable thereto. Interface may request
offers to make Domestic Bid Rate Loans for more
than one Interest Period in a single Domestic Bid
Rate Quote Request. A Domestic Bid Rate Quote
Request that does not conform substantially to
the format of Exhibit O hereto shall be rejected,
and the Domestic Agent shall promptly notify
Interface of such rejection by facsimile
transmission. No Domestic Bid Rate Quote Request
shall be given within ten Business Days after any
other Domestic Bid Rate Quote Request has been
transmitted to the Domestic Syndicated Lenders
pursuant to Section 3.06(c)(2).
(2) Promptly upon receipt of a Domestic Bid
Rate Quote Request that is not rejected pursuant
to Section 3.06(c)(1), the Domestic Agent shall
transmit to each of the Domestic Syndicated
Lenders by facsimile transmission an invitation by
Interface to each Domestic Syndicated Lender to
submit Domestic Bid Rate Quotes offering to make
Domestic Bid Rate Loans in accordance with this
Section 3.06 (each an "Invitation for Domestic Bid
Rate Quotes") substantially in the form of
Exhibit P hereto.
(3) Each Domestic Syndicated Lender may, in
its sole discretion, submit a Domestic Bid Rate
Quote containing an offer or offers to make
Domestic Bid Rate Loans in response to any
Invitation for Domestic Bid Rate Quotes in
accordance with the following procedures:
(A) Each Domestic Bid Rate Quote must
comply with the requirements of this Section
3.06(c)(3) and must be submitted to the
Domestic Agent by facsimile transmission at
its offices specified herein not later than
(x) 9:45 a.m. (Eastern time) in the case of
the Domestic Agent, and (y) 10:00 a.m.
(Eastern time) in the case of each other
Domestic Syndicated Lender, on the second
Business Day immediately preceding the date
of the proposed Domestic Bid Rate Borrowing
or, in any such case upon reasonable prior
notice to the Domestic Syndicated Lenders,
such other time and date as Interface and the
Domestic Agent may agree, provided that the
Domestic Agent shall always be required to
submit its Domestic Bid Rate Quotes not less
than 15 minutes prior to the other Domestic
Syndicated Lenders). Subject to Articles VI
and X, any Domestic Bid Rate Quotes so made
shall be irrevocable except with the written
consent of the Domestic Agent given on the
instructions of Interface.
(B) Each Domestic Bid Rate Quote shall
in any case specify (i) the date of the
proposed Domestic Bid Rate Borrowing, which
shall be the same as that set forth in the
applicable Invitation for Domestic Bid Rate
Quotes, (ii) the principal amount of the
- 42 -<PAGE>
Domestic Bid Rate Loan for which each such
offer is being made, which principal amount
(x) may be greater than, less than or equal
to the Domestic Syndicated Loan Commitment of
the quoting Domestic Syndicated Lender, and
(y) may not exceed the principal amount of
Domestic Bid Rate Loans for which offers were
requested, (iii) the minimum or maximum
amount, if any, of the Domestic Bid Rate Loan
which may be accepted by Interface, (iv) the
applicable Interest Period, and (v) the
identity of the quoting Domestic Syndicated
Lender.
(C) The Domestic Agent shall reject any
Domestic Bid Rate Quote that (i) is not
substantially in the form of Exhibit Q hereto
or does not specify all of the information
required by Section 3.06(c)(3)(B), (ii)
contains qualifying, conditional or similar
language, other than any such language
contained in Exhibit Q hereto, (iii) proposes
terms other than or in addition to those set
forth in the applicable Invitation for
Domestic Bid Rate Quotes, or (iv) arrives
after the time set forth in Section
3.06(c)(3)(A).
(D) If any Domestic Bid Rate Quote
shall be rejected pursuant to Section
3.06(c)(3)(C), then the Domestic Agent shall
notify the relevant Domestic Syndicated
Lender of such rejection as soon as
practicable.
If any Domestic Syndicated Lender shall elect not
to submit a Domestic Bid Rate Quote, such Domestic
Bid Rate Lender shall so notify the Domestic Agent
not later than 10:00 a.m. (Eastern time) on the
second Business Day immediately preceding the date
of the proposed Domestic Bid Rate Borrowing, and
such Domestic Syndicated Lender shall not be
obligated to, and shall not, make any Domestic Bid
Rate Loan as part of such Domestic Bid Rate
Borrowing; provided, however, that the failure of
any Domestic Syndicated Lender to give such notice
shall not cause it to be obligated to make any
Domestic Bid Rate Loan as part of such Borrowing.
(4) Subject to its timely receipt of one or
more Domestic Bid Rate Quotes in the manner
described in Section 3.06(c)(3), the Domestic
Agent shall notify Interface as soon as
practicable (but in any event using reasonable
efforts to effect such notice prior to 10:45 a.m.
(Eastern time) on the second Business Day
immediately preceding the date of the proposed
Domestic Bid Rate Borrowing) as to the terms (i)
of any Domestic Bid Rate Quote submitted by a
Domestic Syndicated Lender that is in accordance
with Section 3.06(c) and (ii) of any Domestic Bid
- 43 -<PAGE>
Rate Quote that is in accordance with Section
3.06(c) and amends, modifies or is otherwise
inconsistent with a previous Domestic Bid Rate
Quote submitted by such Domestic Syndicated Lender
with respect to the same Domestic Bid Rate Quote
Request. Any such subsequent Domestic Bid Rate
Quote shall be disregarded by the Domestic Agent
unless such subsequent Domestic Bid Rate Quote
specifically states that it is submitted solely to
correct a manifest error in such previous Domestic
Bid Rate Quote. The Domestic Agent's notice to
Interface shall specify the aggregate principal
amount of Domestic Bid Rate Loans for which offers
have been received for each Interest Period
specified in the related Domestic Bid Rate Quote
Request and the respective principal amounts and
Domestic Bid Rates, as the case may be, so
offered.
(5) Subject to receipt of the notice from
the Domestic Agent referred to in Section
3.06(c)(4), not later than 11:00 a.m. (Eastern
time) on the second Business Day immediately
preceding the date of the proposed Domestic Bid
Rate Borrowing, Interface shall notify the
Domestic Agent of Interface's acceptance or
rejection of the offer so notified to it pursuant
to Section 3.06(c)(4); provided, however, that the
failure by Interface to give such notice to the
Domestic Agent shall be deemed to be a rejection
by Interface of all such offers. In the case of
acceptance, such notice (each a "Domestic Bid Rate
Acceptance Notice") shall specify the aggregate
principal amount of offers for each Interest
Period that are accepted. Interface may accept or
reject any Domestic Bid Rate Quote in whole or in
part (subject to the terms of Section 3.06(b);
provided that (i) the aggregate principal amount
of each Domestic Bid Rate Advance may not exceed
the applicable amount set forth in the related
Domestic Bid Rate Quote Request, (ii) acceptance
of offers may only be made in the order of
ascending Domestic Bid Rates, (iii) Interface may
not accept any offer of the type described in
Section 3.06(c)(3)(C) or that otherwise fails to
comply with the requirements of this Agreement for
the purpose of obtaining a Domestic Bid Rate Loan
under this Agreement, and (iv) any such acceptance
by Interface shall constitute its irrevocable
request to borrow the aggregate principal amount
so accepted.
(6) If offers are made by two or more
Domestic Syndicated Lenders with the same Domestic
Bid Rates for a greater aggregate principal amount
than the amount in respect of which offers are
permitted to be accepted for the related Interest
Period, the principal amount of Domestic Bid Rate
Loans in respect of which such offers are accepted
shall be allocated by the Domestic Agent among
such Domestic Syndicated Lenders as nearly as
possible (in such multiples as the Domestic Agent
may deem appropriate) in proportion to the
aggregate principal amount of such offers;
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provided, however, that no Domestic Syndicated
Lender shall be allocated a portion of any
Domestic Bid Rate Advance which is less than the
minimum amount which such Domestic Syndicated
Lender has indicated that it is willing to accept.
Allocations by the Domestic Agent of the amounts
of Domestic Bid Rate Loans shall be conclusive in
the absence of manifest error. The Domestic Agent
shall promptly, but in any event by 12:00 noon
(Eastern time) on the second Business Day
immediately preceding the date of the proposed
Domestic Bid Rate Borrowing, notify each Domestic
Syndicated Lender of its receipt of a Domestic Bid
Rate Acceptance Notice and the aggregate principal
amount of each Domestic Bid Rate Advance allocated
to each participating Domestic Syndicated Lender.
(d) No later than 1:00 p.m. (Eastern time) on the date
of each Domestic Bid Rate Borrowing, each Domestic Bid Rate
Lender participating in such Borrowing will make available its
portion of such Borrowing in immediately available funds at the
Payment Office of the Domestic Agent. The Domestic Agent will
make available to Interface the aggregate of the amounts (if any)
so made available by the Domestic Bid Rate Lenders to the
Domestic Agent in a timely manner by crediting such amounts to
Interface's demand deposit account maintained with the Domestic
Agent. In the event that the Domestic Bid Rate Lenders do not
make such amounts available to the Domestic Agent by the time
prescribed above, but such amount is received later that day,
such amount may be credited to Interface in the manner described
in the preceding sentence on the next Business Day (with interest
on such amount to begin accruing hereunder on such next Business
Day).
(e) Interface's obligations to pay the principal of,
and interest on, the Domestic Bid Rate Loans to each Domestic Bid
Rate Lender shall be evidenced by the records of the Domestic
Agent and such Domestic Bid Rate Lender and by the Domestic Bid
Rate Note payable to such Domestic Bid Rate Lender (or the
assignor of such Domestic Bid Rate Lender) completed in
conformity with this Agreement.
(f) All outstanding principal amounts under each
Domestic Bid Rate Loan shall be due and payable in full (i) on
the expiration of the Interest Period applicable to such Domestic
Bid Rate Loan, and (ii) on the Revolver/Multicurrency Maturity
Date.
Section 3.07. Use of Proceeds. The proceeds of the
Domestic Syndicated Loans, Domestic Swing Line Loans, and
Domestic Bid Rate Loans shall be used as working capital and for
other general corporate purposes of Interface and its
Consolidated Subsidiaries.
Section 3.08. Reduction in Domestic Syndicated
Loan Commitments on the Closing Date.
(a) On the Closing Date, the aggregate Domestic
Syndicated Loan Commitments of the Lenders shall be reduced from
$190,000,000 in aggregate principal amount to $170,000,000 in
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aggregate principal amount, with such aggregate reduction being
the result of an increase in the Domestic Syndicated Loan
Commitment by one of the Lenders and decreases in the Domestic
Syndicated Loan Commitments of the remaining Lenders. After
giving effect to the foregoing actions, the Domestic Syndicated
Loan Commitments of the Lenders shall be as set forth on the
signature pages to this Agreement. On the Closing Date, all
outstanding Domestic Syndicated Loans that had been borrowed or
previously continued or converted prior to the Closing Date shall
be prepaid in full, together with all interest accrued and unpaid
thereon through the date of such prepayment occurring and all
amounts required to be paid pursuant to Section 5.12 as a result
of such prepayment occurring on a date other than the last day of
an Interest Period. All Borrowings of Domestic Syndicated Loans
pursuant to Section 3.02 (including, without limitation, all such
Borrowings made by Interface on the Closing Date to prepay all
Domestic Syndicated Loans then outstanding) and all continuations
and conversions of outstanding Domestic Syndicated Loans pursuant
to Section 3.02 occurring after the Closing Date shall be made on
the basis of the revised Domestic Syndicated Loan Commitments as
provided in this Agreement. All Domestic Bid Rate Loans
outstanding on the Closing Date and scheduled to mature after the
Closing Date shall continue to remain outstanding in accordance
with their respective terms and shall not be repaid or otherwise
affected by the transactions described in this Section 3.08.
(b) Interface's obligations to pay the principal of,
and interest on, all Domestic Syndicated Loans under the Domestic
Syndicated Notes being executed and delivered on the Closing Date
by Interface shall be evidenced by the records of the Domestic
Agent and each such Lender and by such Domestic Syndicated Note
payable to such Lender completed in conformity with this
Agreement.
(c) From and after the Closing Date, all references in
this Agreement to the Domestic Syndicated Loan Commitments shall
be deemed to include the Domestic Syndicated Loan Commitments as
reduced by this Section 3.08 (subject, however, to subsequent
increases or decreases from time to time pursuant to the
provisions of this Agreement).
ARTICLE IV.
MULTICURRENCY REVOLVING LOANS
Section 4.01. Description of Multicurrency Revolving
Credit Facilities. Subject to and upon the terms and conditions
herein set forth (i) the Multicurrency Syndicated Lenders hereby
establish in favor of the Multicurrency Borrowers a revolving
credit facility pursuant to which such Multicurrency Syndicated
Lenders agree to make Multicurrency Syndicated Loans to the
Multicurrency Borrowers in accordance with Section 4.02, (ii) the
Multicurrency Swing Line Lender hereby establishes in favor of
the Multicurrency Borrowers a swing line credit facility pursuant
to which the Multicurrency Swing Line Lender agrees to make
Multicurrency Swing Line Loans to the Multicurrency Borrowers in
accordance with Section 4.05, and (iii) each Multicurrency
Syndicated Lender may, in its sole discretion, submit bids to
make Multicurrency Bid Rate Loans to the Multicurrency Borrowers
in accordance with Section 4.06; provided, however, that in no
event may the aggregate principal amount of all outstanding
Multicurrency Revolving Loans exceed at any time the total
Multicurrency Syndicated Loan Commitments from time to time in
effect.
- 46 -<PAGE>
Section 4.02. Multicurrency Syndicated Loans.
(a) Subject to and upon the terms and conditions
herein set forth (including the limitation set forth in Section
4.01), each Multicurrency Syndicated Lender severally agrees to
make to the Multicurrency Borrowers from time to time prior to
the Revolver/Multicurrency Maturity Date, Multicurrency
Syndicated Loans in an aggregate principal amount outstanding at
any time not to exceed such Multicurrency Syndicated Lender's
Multicurrency Syndicated Loan Commitment. For the purpose of
determining the unutilized portion of the Multicurrency
Syndicated Loan Commitment of each Multicurrency Syndicated
Lender on the date of a requested Borrowing under the
Multicurrency Syndicated Loan Commitments, the Dollar Equivalent
of the Borrowing then being requested shall be aggregated with
the Dollar Equivalents of all Multicurrency Syndicated Loans then
outstanding (the Dollar Equivalent of each such outstanding Loan
to be calculated as of the date of the most recent conversion or
continuation of such Loan pursuant to Section 4.02(e) or, if not
previously continued or converted, the date of the initial
Borrowing of such Loan pursuant to Section 4.02(c)). The
Multicurrency Borrowers shall be entitled to repay and reborrow
Multicurrency Syndicated Loans in accordance with the provisions,
and subject to the limitations, set forth herein (including the
limitation set forth in Section 4.01).
(b) Each Multicurrency Syndicated Loan shall, at the
option of a Multicurrency Borrower, be made or continued as, or
converted into, part of one or more Borrowings that, unless
otherwise specifically provided herein, shall consist entirely of
Base Rate Advances (if selected by Scherpenzeel B.V. with respect
to Multicurrency Syndicated Loans made in U.S. Dollars) or
Eurocurrency Advances. The aggregate principal amount of each
Borrowing of Multicurrency Syndicated Loans shall be in the
minimum amounts and multiples indicated below for a Borrowing in
the specified Currency, provided that Multicurrency Syndicated
Loans comprised of Base Rate Advances shall not be less than
$250,000 or a greater integral multiple of $1,000:
Minimum
Currency Borrowing Multiple
-------- --------- --------
U.S. Dollars 1,000,000 100,000
Dutch Guilders 2,000,000 200,000
German Marks 1,500,000 150,000
French Francs 5,500,000 550,000
British Pounds 550,000 55,000
Japanese Yen 100,000,000 10,000,000
At no time shall the number of Borrowings outstanding under this
Section 4.02 and Section 4.06 exceed eight; provided that, for
purposes of determining the number of Borrowings outstanding and
the minimum amount for Borrowings resulting from conversions or
continuations, all Borrowings of Base Rate Advances under this
Section 4.02 shall be considered as one Borrowing.
(c) Whenever a Multicurrency Borrower desires to make
a Multicurrency Syndicated Borrowing (other than one resulting
from a conversion or continuation pursuant to Section 4.02(e)),
it shall give the Multicurrency Agent prior written notice (or
telephonic notice promptly confirmed in writing) of such
- 47 -<PAGE>
Multicurrency Syndicated Borrowing (each a "Multicurrency
Syndicated Borrowing Notice") prior to 11:00 a.m. (Eastern time)
at its Payment Office (i) one Business Day prior to the requested
date of such Multicurrency Syndicated Borrowing in the case of
Base Rate Advances (available only with respect to Multicurrency
Syndicated Loans to be made to Scherpenzeel B.V. in U.S.
Dollars), and (ii) three Business Days prior to the requested
date of such Multicurrency Syndicated Borrowing in the case of
Eurocurrency Advances. Notices received after 11:00 a.m.
(Eastern time) shall be deemed received on the next Business Day.
Each Multicurrency Syndicated Borrowing Notice shall be
irrevocable and shall specify the aggregate principal amount of
the Multicurrency Syndicated Borrowing, the date of the
Multicurrency Syndicated Borrowing (which shall be a Business
Day), and whether the Multicurrency Syndicated Borrowing is to
consist of a Base Rate Advance or a Eurocurrency Advance and, in
the case of a Eurocurrency Advance, the Currency in which such
Advance is to be made and the Interest Period to be applicable
thereto.
(d) No later than 11:00 a.m. (Eastern time) on the
date of each Multicurrency Syndicated Borrowing (other than one
resulting from a conversion or continuation pursuant to Section
4.02(e)), each Multicurrency Syndicated Lender will make
available its Pro Rata Share of the amount of such Multicurrency
Syndicated Borrowing in immediately available funds at the
Payment Office of the Multicurrency Agent. The Multicurrency
Agent will make available to the applicable Multicurrency
Borrower the aggregate of the amounts (if any) so made available
by the Multicurrency Syndicated Lenders to the Multicurrency
Agent in a timely manner by crediting such amounts to the
applicable Multicurrency Borrower's demand deposit account
maintained with the Multicurrency Agent. If a Multicurrency
Syndicated Lender does not make such amount available to the
Multicurrency Agent by the time prescribed above, but such amount
is received later that day, such amount may be credited to the
applicable Multicurrency Borrower in the manner described in the
preceding sentence on the next Business Day (with interest on
such amount to begin accruing hereunder on such next Business
Day).
(e) Whenever a Multicurrency Borrower desires to
convert all or a portion of an outstanding Multicurrency
Syndicated Borrowing made as a Base Rate Advance or Eurocurrency
Advance into one or more Multicurrency Syndicated Borrowings in
the same Currency consisting of an Advance of another Type, or to
continue outstanding a Multicurrency Syndicated Borrowing made as
a Eurocurrency Advance in the same Currency for a new Interest
Period, such Multicurrency Borrower or Interface acting on behalf
of such Multicurrency Borrower, shall give the Multicurrency
Agent at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each such
Multicurrency Syndicated Borrowing to be converted into or
continued as a Eurocurrency Advance. Such notice (each a
"Notice of Multicurrency Conversion/Continuation") shall be given
prior to 11:00 a.m. (Eastern time) at its Administrative Office
on the date specified. Each such Notice of Multicurrency
Conversion/Continuation shall be irrevocable and shall specify
the aggregate principal amount of the Advance to be converted or
continued, the date of such conversion or continuation, whether
the Advance is being converted into or continued as a
Eurocurrency Advance and the Interest Period to be applicable
thereto. If, upon the expiration of any Interest Period in
respect of any Eurocurrency Advance, the applicable Multicurrency
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Borrower shall have failed, or pursuant to the following sentence
be unable, to deliver or have delivered on its behalf the Notice
of Multicurrency Conversion/Continuation, such Borrowing shall,
until repaid or until subsequently converted or continued when
the applicable conditions set forth in the following sentence
shall no longer exist, continue outstanding in the same Currency
and shall bear interest at the Special Adjusted LIBO Rate plus
the Applicable Margin. Notwithstanding the first sentence of
this Section 4.02(e), no Notice of Multicurrency
Conversion/Continuation may be given if, on the date of the
requested conversion or continuation, the Dollar Equivalent of
the aggregate outstanding Multicurrency Syndicated Loans
(calculated in the manner set forth in the second sentence of
Section 4.01(a)), together with the aggregate outstanding
Multicurrency Swing Line Loans and Multicurrency Bid Rate Loans,
exceeds the amount of the Multicurrency Syndicated Loan
Commitments in effect on such date, and the Multicurrency
Borrowers shall repay the Multicurrency Revolving Loans by an
amount equal to such excess together with all accrued interest on
such excess amount. So long as any Default or Event of Default
shall have occurred and be continuing, no Multicurrency
Syndicated Borrowing may be converted into or continued as (upon
expiration of the current Interest Period) a Eurocurrency
Advance. No conversion of any Eurocurrency Advance shall be
permitted except on the last day of the Interest Period in
respect thereof.
(f) The Multicurrency Borrowers' obligations to pay
the principal of, and interest on, the Multicurrency Syndicated
Loans to each Multicurrency Syndicated Lender shall be evidenced
by the records of the Multicurrency Agent and such Multicurrency
Syndicated Lender and by the Multicurrency Syndicated Notes
payable to such Multicurrency Syndicated Lender (or the assignor
of such Multicurrency Syndicated Lender) completed in conformity
with this Agreement.
(g) All outstanding principal amounts under the
Multicurrency Syndicated Loans shall be due and payable in full
on the Revolver/Multicurrency Maturity Date.
Section 4.03. Reductions of Multicurrency Syndicated
Loan Commitments.
(a) Upon at least three Business Days' prior
telephonic notice (promptly confirmed in writing) to the
Multicurrency Agent, the Multicurrency Borrowers shall have the
right, without premium or penalty, to terminate the Multicurrency
Syndicated Loan Commitments, in part or in whole, provided that
(i) any such termination shall apply to proportionately and
permanently reduce the Multicurrency Syndicated Loan Commitments
of each of the Multicurrency Syndicated Lenders, (ii) any partial
termination pursuant to this Section 4.03 shall be in an amount
of at least $1,000,000 and integral multiples of $100,000, and
(iii) no such reduction shall be permitted which would (x)
require a prepayment that is not permitted by Section 5.06, or
(y) reduce the Multicurrency Syndicated Loan Commitments to an
amount less than the aggregate principal amounts outstanding
under the Multicurrency Revolving Loans.
(b) If any Multicurrency Syndicated Lender fails to
deliver to Interface by December 31, 1997, the certificate or
- 49 -<PAGE>
other document from the United Kingdom Inland Revenue as
specified in Section 5.07(b)(v)(B) or otherwise fails to
establish to the satisfaction of Interface that it is exempt from
withholding taxes imposed by the United Kingdom, and such
Multicurrency Syndicated Lender's Multicurrency Syndicated Loan
Commitment has not been assigned to another Multicurrency
Syndicated Lender or an Eligible Assignee pursuant to Section
12.06(g), then upon at least five Business Days' prior written
notice to the Multicurrency Agent and such Multicurrency
Syndicated Lender, the Multicurrency Borrowers shall have the
right to terminate the Multicurrency Syndicated Loan Commitment
of such Multicurrency Syndicated Lender, and the aggregate amount
of Multicurrency Syndicated Loan Commitments shall be reduced by
such amount (but without any effect on the amount of the
Multicurrency Syndicated Loan Commitment of any other
Multicurrency Syndicated Lender).
(c) If any mandatory prepayment shall be due with
respect to the Term Loans pursuant to Section 2.03, but such
prepayment cannot be applied, or an escrow for such prepayment is
established as provided in Section 2.03(d) for application,
against the Term Loans, in whole or in part, because the Term
Loans have been, or are then being, paid (currently or pursuant
to such escrow arrangement) in full, then the Domestic Syndicated
Loan Commitments and the Multicurrency Syndicated Loan
Commitments shall automatically and ratably be reduced by an
amount equal to such prepayment or portion thereof which cannot
be so applied; provided, however, that no such reduction pursuant
to this Section 4.03(b) shall be required to the extent that the
Domestic Syndicated Loan Commitments and the Multicurrency
Syndicated Loan Commitments would be less than $135,000,000 in
the aggregate. Any such reduction of the Domestic Syndicated
Loan Commitments and the Multicurrency Syndicated Loan
Commitments shall apply as a proportional and permanent reduction
with respect to the Domestic Syndicated Loan Commitments and the
Multicurrency Syndicated Loan Commitments of each of the Domestic
Syndicated Lenders and Multicurrency Syndicated Lenders,
respectively.
Section 4.04. Mandatory Prepayments of Multicurrency
Revolving Loans.
(a) If the aggregate outstanding principal amounts of
the Multicurrency Revolving Loans exceed at any time the amount
of the Multicurrency Syndicated Loan Commitments, as reduced
pursuant to Section 4.03 or otherwise, the Multicurrency
Borrowers shall immediately repay the Multicurrency Revolving
Loans by an amount equal to such excess, together with all
accrued but unpaid interest on such excess amount. If the Dollar
Equivalent of the aggregate outstanding Multicurrency Revolving
Loans (calculated in the manner set forth in the second sentence
of Section 4.02(a)) exceed the amount of the Multicurrency
Syndicated Loan Commitments, as reduced pursuant to Section 4.03
or otherwise, the Multicurrency Borrowers shall immediately repay
the Multicurrency Revolving Loans by a Dollar Equivalent amount
equal to such excess, together with all accrued but unpaid
interest on such excess amount.
(b) If at any time the Multicurrency Agent shall
determine that the aggregate principal amount of the
Multicurrency Revolving Loans (after converting all Eurocurrency
Advances to their Dollar Equivalent on the date of calculation)
is equal to or greater than one hundred ten percent (110%) of the
aggregate Multicurrency Syndicated Loan Commitments then in
- 50 -<PAGE>
effect, the Multicurrency Borrowers shall, upon three Business
Days' prior written notice from the Multicurrency Agent to the
Multicurrency Borrowers, or to Interface on behalf of the
Multicurrency Borrowers, prepay an aggregate principal amount of
Multicurrency Revolving Loans such that the Dollar Equivalent of
the outstanding principal amount of the Multicurrency Revolving
Loans does not exceed the aggregate Multicurrency Syndicated Loan
Commitments.
(c) Each mandatory prepayment of Multicurrency
Revolving Loans pursuant to this Section 4.04 shall be applied
first to Base Rate Advances to the full extent thereof before
application to Fixed Rate Advances; provided, however, that so
long as no Default or Event of Default has occurred and is
continuing, in lieu of application of such prepayment to Fixed
Rate Advances prior to the expiration of the respective Interest
Periods with respect thereto, the Multicurrency Borrowers, at
their option, may execute an Escrow Letter with respect to such
prepayment and deposit with the Collateral Agent funds equal to
the amount of such prepayment for application in accordance with
the terms of such Escrow Letter.
Section 4.05. Multicurrency Swing Line Loans.
(a) Subject to and upon the terms and conditions
herein set forth (including the limitation set forth in Section
4.01), the Multicurrency Swing Line Lender agrees to make to the
Multicurrency Borrowers from time to time prior to the
Revolver/Multicurrency Maturity Date, Multicurrency Swing Line
Loans in U.S. Dollars in an aggregate principal amount
outstanding at any time not to exceed the Multicurrency Swing
Line Commitment then in effect. The Multicurrency Borrowers
shall be entitled to repay and reborrow Multicurrency Swing Line
Loans in accordance with the provisions, and subject to the
limitations, set forth herein (including the limitation set forth
in Section 4.01).
(b) Each Multicurrency Swing Line Loan shall, at the
option of the applicable Multicurrency Borrower, be made as a
Base Rate Advance or Multicurrency Transaction Rate Advance. The
aggregate principal amount of each Multicurrency Swing Line
Borrowing shall be not less than $250,000 or a greater integral
multiple of $1,000. At no time shall the number of Multicurrency
Swing Line Borrowings outstanding under this Section 4.05 exceed
three; provided that, for purposes of determining the number of
Multicurrency Swing Line Borrowings outstanding, all
Multicurrency Swing Line Borrowings consisting of Base Rate
Advances shall be considered as one Multicurrency Swing Line
Borrowing.
(c) Whenever a Multicurrency Borrower desires to make
a Multicurrency Swing Line Borrowing, such Multicurrency
Borrower, or Interface acting on behalf of such Multicurrency
Borrower, shall give the Multicurrency Swing Line Lender (with a
copy to the Multicurrency Agent) prior written notice (or
telephonic notice promptly confirmed in writing) of such
Multicurrency Swing Line Borrowing (each a "Multicurrency Swing
Line Borrowing Notice") prior to 10:00 a.m. (Eastern time) on the
date of such Multicurrency Swing Line Borrowing. Each
Multicurrency Swing Line Borrowing Notice shall specify the
aggregate principal amount of the Multicurrency Swing Line
- 51 -<PAGE>
Borrowing, the date of such Multicurrency Swing Line Borrowing
(which shall be a Business Day), whether a Multicurrency
Transaction Rate Quote is being requested and, if so, the
Interest Period to be applicable thereto. If a Multicurrency
Transaction Rate Quote is requested as aforesaid, then prior to
12:00 noon (Eastern time) on such date, the Multicurrency Swing
Line Lender shall furnish to the Multicurrency Borrower or to
Interface on behalf of such Multicurrency Lender (with a copy to
the Multicurrency Agent) with a quotation of the interest rate
being offered with respect to such Multicurrency Swing Line
Borrowing (whether expressed as a fixed rate of interest in
effect for the Interest Period applicable thereto or as a
floating rate of interest based on a specified interest rate
index and applicable margin for the Interest Period to be
applicable thereto; in either case, a "Multicurrency Transaction
Rate Quote") by telephone (promptly confirmed in writing) or by
facsimile transmission. The Multicurrency Borrower, or Interface
acting on behalf of the Multicurrency Borrower, shall immediately
inform the Multicurrency Swing Line Lender (with a copy to the
Multicurrency Agent) of its decision as to whether to accept the
Multicurrency Transaction Rate Quote and to confirm the
Multicurrency Swing Line Borrowing (which may be done by
telephone, promptly confirmed in writing, and which decision
shall be irrevocable). If the Multicurrency Borrower, or
Interface acting on behalf of the Multicurrency Borrower, has so
informed the Multicurrency Swing Line Lender and confirmed the
terms of the Multicurrency Swing Line Borrowing, then no later
than 2:00 p.m. (Eastern time) on such date, the Multicurrency
Swing Line Lender shall make the principal amount of the
Multicurrency Swing Line Loan available to the Multicurrency
Agent in immediately available funds at the Payment Office of the
Multicurrency Agent, and the Multicurrency Agent will make
available to the Multicurrency Borrower such amount by crediting
such amount to the Multicurrency Borrower's demand deposit
account maintained with the Multicurrency Agent. In the event
that the Multicurrency Swing Line Lender does not make such
amount available to the Multicurrency Agent at the time
prescribed above, but such amount is received later that day,
such amount may be credited to the Multicurrency Borrower in the
manner described in the preceding sentence on the next Business
Day (with interest on such amount to begin accruing hereunder on
such next Business Day).
(d) The Multicurrency Borrowers' obligations to pay
the principal of, and interest on, the Multicurrency Swing Line
Loans shall be evidenced by the records of the Multicurrency
Agent and the Multicurrency Swing Line Lender and by the
Multicurrency Swing Line Notes payable to the Multicurrency Swing
Line Lender (or the assignor of such Multicurrency Swing Line
Lender) completed in conformity with this Agreement.
(e) All outstanding principal amounts under each
Multicurrency Swing Line Loan shall be due and payable in full
(i) on the expiration of the Interest Period applicable to such
Multicurrency Swing Line Loan if outstanding as a Multicurrency
Transaction Rate Advance, and (ii) on the Revolver/Multicurrency
Maturity Date.
(f) At any time on the request of the Multicurrency
Swing Line Lender, each Multicurrency Syndicated Lender other
than the Multicurrency Swing Line Lender shall purchase a
participating interest in all outstanding Multicurrency Swing
Line Loans in an amount equal to its Pro Rata Share (based upon
on its respective Multicurrency Syndicated Loan Commitment) of
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such Multicurrency Swing Line Loans, and the Multicurrency Swing
Line Lender shall furnish each Multicurrency Syndicated Lender
with a certificate evidencing such participating interest. Such
purchase shall be made on the third Business Day after such
request is made; provided, however, that unless an Event of
Default has occurred and is continuing on the date such request
is made, the purchase of a participating interest in any
Multicurrency Swing Line Loan outstanding as a Multicurrency
Transaction Rate Advance shall not be required to be made until
the expiration of the current Interest Period in effect for such
Multicurrency Swing Line Loan. On the date of such required
purchase, each Multicurrency Syndicated Lender will immediately
transfer to the Multicurrency Swing Line Lender, in immediately
available funds, the amount of its participation. Whenever, at
any time after the Multicurrency Swing Line Lender has received
from any such Multicurrency Syndicated Lender the funds for its
participating interest in a Multicurrency Swing Line Loan, the
Multicurrency Agent receives any payment on account thereof, the
Multicurrency Agent will distribute to such Multicurrency
Syndicated Lender its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Multicurrency
Syndicated Lender's participating interest was outstanding and
funded); provided, however, that if such payment received by the
Multicurrency Agent is required to be returned, such
Multicurrency Syndicated Lender will return to the Multicurrency
Agent any portion thereof previously distributed by the
Multicurrency Agent to it. Each Multicurrency Syndicated
Lender's obligation to purchase such participating interests
shall be absolute and unconditional and shall not be affected by
any circumstance, including without limitation (i) any setoff,
counterclaim, recoupment, defense or other right that such
Multicurrency Syndicated Lender or any other Person may have
against the Multicurrency Swing Line Lender requesting such
purchase or any other Person for any reason whatsoever, (ii) the
occurrence or continuation of a Default or an Event of Default or
the termination of any of the Commitments, (iii) any adverse
change in the condition (financial or otherwise) of the
Multicurrency Borrowers, Interface, any of its Consolidated
Subsidiaries, or any other Person, (iv) any breach of this
Agreement by the Multicurrency Borrower, Interface, or any other
Lender, or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing;
provided, however, that no such obligation shall exist (A) to the
extent that the aggregate Multicurrency Swing Line Loans were
advanced in excess of the Multicurrency Swing Line Commitment
then in effect, or (B) with respect to any Multicurrency Swing
Line Loan where the Multicurrency Swing Line Lender actually
advanced to the applicable Borrower net proceeds from the
Multicurrency Swing Line Loan (and therefore was not refunding a
previous Multicurrency Swing Line Loan) at a time when (x) the
Multicurrency Swing Line Lender had actual knowledge that an
Event of Default had occurred and then existed, and (y) the
Required Lenders had not agreed to waive such Event of Default
for purposes of funding such Multicurrency Swing Line Loan.
Section 4.06. Multicurrency Bid Rate Loans.
(a) Subject to and upon the terms and conditions
herein set forth (including the limitation set forth in Section
4.01), a Multicurrency Borrower may, as set forth in this Section
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4.06, request the Multicurrency Syndicated Lenders, from time to
time prior to the Revolver/Multicurrency Maturity Date, to make
offers to make Multicurrency Bid Rate Loans in U.S. Dollars to
the Multicurrency Borrower. Each Multicurrency Syndicated Lender
may, but shall have no obligation to, make such offers and the
Multicurrency Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section
4.06. The Multicurrency Borrowers shall be entitled to repay and
reborrow Multicurrency Bid Rate Loans in accordance with the
provisions, and subject to the limitation set forth herein
(including the limitations set forth in Section 4.01).
(b) The aggregate principal amount of each
Multicurrency Bid Rate Borrowing requested by a Multicurrency
Borrower shall be an amount not less than $5,000,000 or a greater
integral multiple of $1,000,000. At no time shall the number of
Borrowings outstanding under this Section 4.06 and Section 4.02
exceed eight.
(c) Multicurrency Bid Rate Loans may be made to the
Multicurrency Borrowers in accordance with the procedures set
forth in this Section 4.06(c).
(1) Whenever a Multicurrency Borrower wishes
to request offers to make Multicurrency Bid Rate
Loans under this Section 4.06, the Multicurrency
Borrower, or Interface acting on behalf of the
Multicurrency Borrower, shall transmit to the
Multicurrency Agent by facsimile transmission a
request for such offers (each a "Multicurrency Bid
Rate Quote Request") so as to be received by the
Multicurrency Agent not later than 10:00 a.m.
(Eastern time) on the third Business Day
immediately preceding the date of the proposed
Multicurrency Bid Rate Borrowing, specifying (i)
the date of the Multicurrency Bid Rate Borrowing
(which shall be a Business Day), (ii) the
aggregate principal amount of the Multicurrency
Bid Rate Borrowing, and (iii) the Interest Period
to be applicable thereto. The Multicurrency
Borrower may request offers to make Multicurrency
Bid Rate Loans for more than one Interest Period
in a single Multicurrency Bid Rate Quote Request.
A Multicurrency Bid Rate Quote Request that does
not conform substantially to the format of Exhibit
R hereto shall be rejected, and the Multicurrency
Agent shall promptly notify the Multicurrency
Borrower, or Interface on behalf of the
Multicurrency Borrower, of such rejection by
facsimile transmission. No Multicurrency Bid Rate
Quote Request shall be given within ten Business
Days after any other Multicurrency Bid Rate Quote
Request has been transmitted to the Multicurrency
Syndicated Lenders pursuant to Section 4.06(c)(2).
(2) Promptly upon receipt of a Multicurrency
Bid Rate Quote Request that is not rejected
pursuant to Section 4.06(c)(1), the Multicurrency
Agent shall transmit to each of the Multicurrency
Syndicated Lenders by facsimile transmission an
invitation by the Multicurrency Borrower to each
Multicurrency Syndicated Lender to submit
Multicurrency Bid Rate Quotes offering to make
Multicurrency Bid Rate Loans in accordance with
- 54 -<PAGE>
this Section 4.06 (each an "Invitation for
Multicurrency Bid Rate Quotes") substantially in
the form of Exhibit S hereto.
(3) Each Multicurrency Syndicated Lender
may, in its sole discretion, submit a
Multicurrency Bid Rate Quote containing an offer
or offers to make Multicurrency Bid Rate Loans in
response to any Invitation for Multicurrency Bid
Rate Quotes in accordance with the following
procedures:
(A) Each Multicurrency Bid Rate Quote
must comply with the requirements of this
Section 4.06(c)(3) and must be submitted to
the Multicurrency Agent by facsimile
transmission at its offices specified herein
not later than (x) 9:45 a.m. (Eastern time)
in the case of the Multicurrency Agent, and
(y) 10:00 a.m. (Eastern time) in the case of
each other Multicurrency Syndicated Lender,
on the second Business Day immediately
preceding the date of the proposed
Multicurrency Bid Rate Borrowing or, in any
such case upon reasonable prior notice to the
Multicurrency Syndicated Lenders, such other
time and date as the applicable Multicurrency
Borrower, or Interface acting on behalf of
the Multicurrency Borrower, and the
Multicurrency Agent may agree, provided that
the Multicurrency Agent shall always be
required to submit its Multicurrency Bid Rate
Quotes not less than 15 minutes prior to the
other Multicurrency Syndicated Lenders).
Subject to Articles VI and X, any
Multicurrency Bid Rate Quotes so made shall
be irrevocable except with the written
consent of the Multicurrency Agent given on
the instructions of the Multicurrency
Borrower, or Interface acting on behalf of
the Multicurrency Borrower.
(B) Each Multicurrency Bid Rate Quote
shall in any case specify (i) the date of the
proposed Multicurrency Bid Rate Borrowing,
which shall be the same as that set forth in
the applicable Invitation for Multicurrency
Bid Rate Quotes, (ii) the principal amount of
the Multicurrency Bid Rate Loan for which
each such offer is being made, which
principal amount (x) may be greater than,
less than or equal to the Multicurrency
Syndicated Loan Commitment of the quoting
Multicurrency Syndicated Lender, and (y) may
not exceed the principal amount of
Multicurrency Bid Rate Loans for which offers
were requested, (iii) the minimum or maximum
amount, if any, of the Multicurrency Bid Rate
Loan which may be accepted by the
Multicurrency Borrower, (iv) the applicable
Interest Period, and (v) the identity of the
quoting Multicurrency Syndicated Lender.
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(C) The Multicurrency Agent shall
reject any Multicurrency Bid Rate Quote that
(i) is not substantially in the form of
Exhibit T hereto or does not specify all of
the information required by Section
4.06(c)(3)(B), (ii) contains qualifying,
conditional or similar language, other than
any such language contained in Exhibit T
hereto, (iii) proposes terms other than or in
addition to those set forth in the applicable
Invitation for Multicurrency Bid Rate Quotes,
or (iv) arrives after the time set forth in
Section 4.06(c)(3)(A).
(D) If any Multicurrency Bid Rate Quote
shall be rejected pursuant to Section
4.06(c)(3)(C), then the Multicurrency Agent
shall notify the relevant Multicurrency
Syndicated Lender of such rejection as soon
as practicable.
If any Multicurrency Syndicated Lender shall elect
not to submit a Multicurrency Bid Rate Quote, such
Multicurrency Bid Rate Lender shall so notify the
Multicurrency Agent not later than 10:00 a.m.
(Eastern time) on the second Business Day
immediately preceding the date of the proposed
Multicurrency Bid Rate Borrowing, and such
Multicurrency Syndicated Lender shall not be
obligated to, and shall not, make any
Multicurrency Bid Rate Loan as part of such
Multicurrency Bid Rate Borrowing; provided,
however, that the failure of any Multicurrency
Syndicated Lender to give such notice shall not
cause it to be obligated to make any Multicurrency
Bid Rate Loan as part of such Borrowing.
(4) Subject to its timely receipt of one or
more Multicurrency Bid Rate Quotes in the manner
described in Section 4.06(c)(3), the Multicurrency
Agent shall notify the Multicurrency Borrower, or
Interface acting on behalf of the Multicurrency
Borrower, as soon as practicable (but in any event
using reasonable efforts to effect such notice
prior to 10:45 a.m. (Eastern time) on the second
Business Day immediately preceding the date of the
proposed Multicurrency Bid Rate Borrowing) as to
the terms (i) of any Multicurrency Bid Rate Quote
submitted by a Multicurrency Syndicated Lender
that is in accordance with Section 4.06(c) and
(ii) of any Multicurrency Bid Rate Quote that is
in accordance with Section 4.06(c) and amends,
modifies or is otherwise inconsistent with a
previous Multicurrency Bid Rate Quote submitted by
such Multicurrency Syndicated Lender with respect
to the same Multicurrency Bid Rate Quote Request.
Any such subsequent Multicurrency Bid Rate Quote
shall be disregarded by the Multicurrency Agent
unless such subsequent Multicurrency Bid Rate
Quote specifically states that it is submitted
solely to correct a manifest error in such
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previous Multicurrency Bid Rate Quote. The
Multicurrency Agent's notice to the Multicurrency
Borrower, or Interface acting on behalf of the
Multicurrency Borrower, shall specify the
aggregate principal amount of Multicurrency Bid
Rate Loans for which offers have been received for
each Interest Period specified in the related
Multicurrency Bid Rate Quote Request and the
respective principal amounts and Multicurrency Bid
Rates, as the case may be, so offered.
(5) Subject to receipt of the notice from
the Multicurrency Agent referred to in Section
4.06(c)(4), not later than 11:00 a.m. (Eastern
time) on the second Business Day immediately
preceding the date of the proposed Multicurrency
Bid Rate Borrowing, the Multicurrency Borrower, or
Interface acting on behalf of the Multicurrency
Borrower, shall notify the Multicurrency Agent of
the Multicurrency Borrower's acceptance or
rejection of the offer so notified to it pursuant
to Section 4.06(c)(4); provided, however, that the
failure to give such notice to the Multicurrency
Agent shall be deemed to be a rejection by the
Multicurrency Borrower of all such offers. In the
case of acceptance, such notice (each a
"Multicurrency Bid Rate Acceptance Notice") shall
specify the aggregate principal amount of offers
for each Interest Period that are accepted. The
Multicurrency Borrower may accept or reject any
Multicurrency Bid Rate Quote in whole or in part
(subject to the terms of Section 4.06(b); provided
that (i) the aggregate principal amount of each
Multicurrency Bid Rate Advance may not exceed the
applicable amount set forth in the related
Multicurrency Bid Rate Quote Request, (ii)
acceptance of offers may only be made in the order
of ascending Multicurrency Bid Rates, (iii) the
Multicurrency Borrower may not accept any offer of
the type described in Section 4.06(c)(3)(C) or
that otherwise fails to comply with the
requirements of this Agreement for the purpose of
obtaining a Multicurrency Bid Rate Loan under this
Agreement, and (iv) any such acceptance shall
constitute its irrevocable request to borrow the
aggregate principal amount so accepted.
(6) If offers are made by two or more
Multicurrency Syndicated Lenders with the same
Multicurrency Bid Rates for a greater aggregate
principal amount than the amount in respect of
which offers are permitted to be accepted for the
related Interest Period, the principal amount of
Multicurrency Bid Rate Loans in respect of which
such offers are accepted shall be allocated by the
Multicurrency Agent among such Multicurrency
Syndicated Lenders as nearly as possible (in such
multiples as the Multicurrency Agent may deem
appropriate) in proportion to the aggregate
principal amount of such offers; provided,
however, that no Multicurrency Syndicated Lender
- 57 -<PAGE>
shall be allocated a portion of any Multicurrency
Bid Rate Advance which is less than the minimum
amount which such Multicurrency Syndicated Lender
has indicated that it is willing to accept.
Allocations by the Multicurrency Agent of the
amounts of Multicurrency Bid Rate Advances shall
be conclusive in the absence of manifest error.
The Multicurrency Agent shall promptly, but in any
event by 12:00 noon (Eastern time) on the second
Business Day immediately preceding the date of the
proposed Multicurrency Bid Rate Borrowing, notify
each Multicurrency Syndicated Lender of its
receipt of a Multicurrency Bid Rate Acceptance
Notice and the aggregate principal amount of each
Multicurrency Bid Rate Advance allocated to each
participating Multicurrency Syndicated Lender.
(d) No later than 1:00 p.m. (Eastern time) on the date
of each Multicurrency Bid Rate Borrowing, each Multicurrency Bid
Rate Lender participating in such Borrowing will make available
its portion of such Borrowing in immediately available funds at
the Payment Office of the Multicurrency Agent. The Multicurrency
Agent will make available to the Multicurrency Borrower in U.S.
Dollars the aggregate of the amounts (if any) so made available
by the Multicurrency Bid Rate Lenders to the Multicurrency Agent
in a timely manner by crediting such amounts to the Multicurrency
Borrower's demand deposit account maintained with the
Multicurrency Agent. In the event that the Multicurrency Bid
Rate Lenders do not make such amounts available to the
Multicurrency Agent by the time prescribed above, but such amount
is received later that day, such amount may be credited to the
Multicurrency Borrower in the manner described in the preceding
sentence on the next Business Day (with interest on such amount
to begin accruing hereunder on such next Business Day).
(e) The Multicurrency Borrowers' obligations to pay
the principal of, and interest on, the Multicurrency Bid Rate
Loans to each Multicurrency Bid Rate Lender shall be evidenced by
the records of the Multicurrency Agent and such Multicurrency Bid
Rate Lender and by the Multicurrency Bid Rate Notes payable to
such Multicurrency Bid Rate Lender (or the assignor of such
Multicurrency Bid Rate Lender) completed in conformity with this
Agreement.
(f) All outstanding principal amounts under each
Multicurrency Bid Rate Loan shall be due and payable in full (i)
on the expiration of the Interest Period applicable to such
Multicurrency Bid Rate Loan, and (ii) on the
Revolver/Multicurrency Maturity Date.
Section 4.07. Use of Proceeds. The proceeds of the
Multicurrency Syndicated Loans, Multicurrency Swing Line Loans,
and Multicurrency Bid Rate Loans shall be used as working capital
and for other general corporate purposes of the applicable
Multicurrency Borrower and its Consolidated Subsidiaries.
Section 4.08. Increase in Multicurrency Syndicated
Loan Commitments on the Closing Date.
(a) On the Closing Date, the aggregate Multicurrency
Syndicated Loan Commitments of the Multicurrency Lenders shall be
increased from U.S. $60,000,000 in aggregate principal amount to
U.S. $80,000,000 in aggregate principal amount, with such
- 58 -<PAGE>
aggregate increase being the result of increases in Multicurrency
Syndicated Loan Commitments by each of the Multicurrency Lenders.
After giving effect to the foregoing actions, the Multicurrency
Syndicated Loan Commitments of the Multicurrency Lenders shall be
as set forth on the signature pages to this Agreement. On the
Closing Date, all outstanding Multicurrency Syndicated Loans that
have been borrowed or previously continued or converted prior to
the Closing Date shall be repaid in full, together with all
interest accrued and unpaid thereon through the date of such
prepayment occurring and all amounts required to be paid pursuant
to Section 5.12 as a result of such prepayment occurring on a
date other than the last day of an Interest Period. All
Borrowings of Multicurrency Syndicated Loans pursuant to Section
4.02 (including, without limitation, all Borrowings made on the
Closing Date to prepay all Multicurrency Syndicated Loans then
outstanding) and all continuations and conversions of outstanding
Multicurrency Syndicated Loans pursuant to Section 4.02 occurring
after the Closing Date shall be made on the basis of the revised
Multicurrency Syndicated Loan Commitments as provided in this
Agreement. All Multicurrency Bid Rate Loans outstanding on the
Closing Date and scheduled to mature after the Closing Date shall
continue to remain outstanding in accordance with their
respective terms and shall not be repaid or otherwise affected by
the transactions described in this Section 4.08.
(b) The Borrowers' respective obligations to pay the
principal of, and interest on, all Multicurrency Syndicated Loans
under the Multicurrency Syndicated Notes being executed and
delivered on the Closing by the Borrowers shall be evidenced by
the records of the Multicurrency Agent and each such Lender and
by such Multicurrency Syndicated Notes payable to such Lender
completed in conformity with this Agreement.
(c) From and after the Closing Date, all references in
this Agreement to the Multicurrency Syndicated Loan Commitments
shall be deemed to include the Multicurrency Syndicated Loan
Commitments as increased by this Section 4.08 (subject, however,
to subsequent increases or decreases from time to time pursuant
to the provisions of this Agreement).
ARTICLE V.
GENERAL LOAN TERMS
Section 5.01. Funding Notices. Without in any way
limiting each Borrower's obligation to confirm in writing any
telephonic notice, each Co-Agent may act without liability upon
the basis of telephonic notice believed by such Co-Agent in good
faith to be from the respective Borrower, or from Interface
acting on behalf of any other Borrower, prior to receipt of
written confirmation. In each such case, each Borrower hereby
waives the right to dispute such Co-Agent's record of the terms
of such telephonic notice.
Section 5.02. Disbursement of Funds.
(a) Unless the Appropriate Co-Agent shall have been
notified by any Lender prior to the date of a Borrowing that such
Lender does not intend to make available to the Appropriate
Co-Agent such Lender's portion of the Borrowing to be made on
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such date, the Appropriate Co-Agent may assume that such Lender
has made such amount available to the such Co-Agent on such date
and such Co-Agent may make available to the respective Borrower a
corresponding amount. If such corresponding amount is not in
fact made available to the Appropriate Co-Agent by such Lender on
the date of Borrowing, the Appropriate Co-Agent shall be entitled
to recover such corresponding amount on demand from such Lender
together with interest at the customary rate set by the
Appropriate Co-Agent for the correction of errors among banks in
the applicable Currency. If such Lender does not pay such
corresponding amount forthwith upon the Appropriate Co-Agent's
demand therefor, the Appropriate Co-Agent shall promptly notify
the respective Borrower, and such Borrower shall immediately pay
such corresponding amount to the Appropriate Co-Agent together
with interest at the rate specified for the Borrowing which
includes such amount paid. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fund its
Commitments hereunder or to prejudice any rights which any
Borrower may have against any Lender as a result of any default
by such Lender hereunder.
(b) All Borrowings under the Term Loans, the Domestic
Syndicated Loan Commitments and the Multicurrency Syndicated Loan
Commitments shall be loaned by those Lenders participating in
such Facilities on the basis of their Pro Rata Share of the Term
Loan Commitments, Domestic Syndicated Loan Commitments, or
Multicurrency Syndicated Loan Commitments, as the case may be.
No Lender shall be responsible for any default by any other
Lender in its obligations hereunder, and each Lender shall be ob-
ligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fund its Commit-
ments hereunder.
Section 5.03. Interest.
(a) Interface agrees to pay interest in respect of all
unpaid principal amounts of the Domestic Revolving Loans and Term
Loans from the respective dates such principal amounts were
advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at rates per annum equal to the rates
indicated below as applicable to outstanding Advances in
accordance with the terms hereof:
(i) For a Base Rate Advance--The Base Rate
in effect from time to time;
(ii) For a CD Rate Advance--The relevant
Fixed CD Rate plus the Applicable Margin;
(iii) For a Eurodollar Advance--The relevant
Adjusted LIBO Rate plus the Applicable Margin;
(iv) For a Domestic Transaction Rate Advance-
-The relevant Domestic Transaction Rate quoted by
the Domestic Swing Line Lender and accepted by
Interface pursuant to Section 3.05(c); and
(v) For a Domestic Bid Rate Advance--The
relevant Accepted Domestic Bid Rate pursuant to
Section 3.06(c)(5).
(b) Each Multicurrency Borrower agrees to pay
interest in respect of all unpaid principal amounts of the
Multicurrency Revolving Loans made to such Multicurrency Borrower
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from the respective dates such principal amounts were advanced to
maturity (whether by acceleration, notice of prepayment or
otherwise) at rates per annum equal to the rates indicated below
as applicable to outstanding Advances in accordance with the
terms hereof:
(i) For a Base Rate Advance--the Base Rate
in effect from time to time;
(ii) For a Eurocurrency Advance--The relevant
Adjusted LIBO Rate (or Special Adjusted LIBO Rate
in the case of Eurocurrency Advances not being
repaid, continued or converted at the expiration
of an Interest Period as provided in
Section 4.02(e)) plus the Applicable Margin;
(iii) For a Multicurrency Transaction Rate
Advance--The relevant Multicurrency Transaction
Rate quoted by the Multicurrency Swing Line Lender
and accepted by or on behalf of the applicable
Multicurrency Borrower pursuant to Section
4.05(c); and
(iv) For a Multicurrency Bid Rate Advance--
The relevant Accepted Multicurrency Bid Rate
pursuant to Section 4.06(c)(5).
(c) Overdue principal and, to the extent not
prohibited by applicable law, overdue interest, in respect of the
Domestic Revolving Loans, Term Loans, and Multicurrency Revolving
Loans, and all other overdue amounts owing hereunder, shall bear
interest from each date that such amounts are overdue:
(i) in the case of overdue principal and
interest with respect to Multicurrency Revolving
Loans outstanding as Eurocurrency Advances (other
than in U.S. Dollars), at the Special Adjusted
LIBO Rate plus the Applicable Margin and an
additional one and one-half percent (1 1/2%) per
annum;
(ii) in the case of overdue principal and
interest with respect to all other Loans
outstanding as Euro Advances (in U.S. Dollars), CD
Rate Advances, Domestic Bid Rate Advances,
Domestic Transaction Rate Advances (to the extent
outstanding as Fixed Rate Advances), Multicurrency
Bid Rate Advances, and Multicurrency Transaction
Rate Advances (to the extent outstanding as Fixed
Rate Advances), at the rate otherwise applicable
for the then-current Interest Period plus an
additional one and one-half percent (1 1/2%) per
annum; thereafter at the rate in effect for Base
Rate Advances pursuant to Section 5.03(b)(i) (in
the case of Eurocurrency Advances (in Dollars),
Multicurrency Bid Rate Advances, and Multicurrency
Transaction Rate Advances under the Multicurrency
Revolving Loans) or Section 5.03(a)(i) (in the
case of all such other Advances) plus an
additional one and one-half percent (1 1/2%) per
annum; and
- 61 -<PAGE>
(iii) in the case of overdue principal and
interest with respect to all other Loans
outstanding as Base Rate Advances and Domestic
Transaction Rate Advances and Multicurrency
Transaction Rate Advances (to the extent not
outstanding as Fixed Rate Advances), and all other
Obligations hereunder (other than Loans), at a
rate equal to the applicable Base Rate plus an
additional one and one-half percent (1 1/2%) per
annum;
provided that no Loan shall bear interest after maturity (whether
by acceleration, notice of prepayment or otherwise) at a rate per
annum less than one and one-half percent (1 1/2%) per annum in
excess of the rate of interest applicable thereto at maturity.
(d) Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of any
repayment thereof; provided that, if a Loan is repaid on the same
day made, one day's interest shall be paid on such Loan.
Interest on all outstanding Base Rate Advances shall be payable
quarterly in arrears on the last calendar day of each fiscal
quarter of Interface in each year. Interest on all outstanding
Fixed Rate Advances, Domestic Transaction Rate Advances, and
Multicurrency Transaction Rate Advances shall be payable on the
last day of each Interest Period applicable thereto, and, in the
case of Fixed Rate Advances having an Interest Period in excess
of 90 days (in the case of CD Rate Advances, or Domestic Bid Rate
Advances or Multicurrency Bid Rate Advances, if quoted on the
basis of 180 days) or in excess of three months (in the case of
Euro Advances, or Domestic Bid Rate Advances or Multicurrency Bid
Rate Advances if quoted on the basis of six months), on each day
which occurs every 90 days or 3 months, as the case may be, after
the initial date of such Interest Period. Interest on all Loans
shall be payable on any conversion of any Advance comprising such
Loans into an Advance of another Type, prepayment (on the amount
prepaid), at maturity (whether by acceleration, notice of
prepayment or otherwise) and, after maturity, on demand.
(e) The Appropriate Co-Agent, upon determining
the Fixed CD Rate, Adjusted LIBO Rate or Special Adjusted LIBO
Rate for any Interest Period, shall promptly notify by telephone
(confirmed in writing) or in writing the respective Borrower and
the other Lenders participating in the respective Facility
thereof. Any such determination shall, absent manifest error, be
final, conclusive and binding for all purposes.
Section 5.04. Interest Periods. In connection
with the making or continuation of, or conversion into, each
Borrowing of Fixed Rate Advances, Domestic Transaction Rate
Advances and Multicurrency Transaction Rate Advances, the
respective Borrower shall select an interest period (each an
"Interest Period") to be applicable to such Advances, which
Interest Period shall (x) in the case of CD Rate Advances, or
Domestic Bid Rate Advances or Multicurrency Bid Rate Advances, if
quoted on the basis of such periods, be either a 30, 60, 90 or
180 day period, (y) in the case of Euro Advances, or Domestic Bid
Rate Advances or Multicurrency Bid Rate Advances, if quoted on
the basis of such periods, be either a 1, 2, 3 or 6 month period,
and (z) in the case of Domestic Transaction Rate Advances or
Multicurrency Transaction Rate Advances, be a period up to ten
days as requested by or on behalf of the respective Borrower and
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accepted by the Domestic Swing Line Lender or Multicurrency Swing
Line Lender, as the case may be; provided that:
(i) The initial Interest Period for any
Borrowing consisting of any such Advance shall
commence on the date of such Borrowing (including
the date of any conversion from a Borrowing
consisting of an Advance of another Type) and each
Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which
the next preceding Interest Period expires;
(ii) If any Interest Period would otherwise
expire on a day which is not a Business Day, such
Interest Period shall expire on the next
succeeding Business Day, provided that if any
Interest Period in respect of a Euro Advance would
otherwise expire on a day that is not a Business
Day but is a day of the month after which no
further Business Day occurs in such month, such
Interest Period shall expire on the next preceding
Business Day;
(iii) Any Interest Period in respect of a Euro
Advance which begins on a day for which there is
no numerically corresponding day in the calendar
month at the end of such Interest Period shall,
subject to part (iv) below, expire on the last
Business Day of such calendar month;
(iv) No Interest Period shall extend beyond
any date upon which any principal payment is due
with respect to the Term Loans, or a prepayment is
required to be made in the Domestic Revolving
Loans or Multicurrency Revolving Loans, unless the
aggregate principal amount of Term Loans,
Multicurrency Revolving Loans, or Domestic
Revolving Loans, as the case may be, that are not
Fixed Rate Advances, or that have Interest Periods
which will expire on or before the date of the
respective payment or prepayment, is equal to or
in excess of the amount of any such principal
payments or prepayments to be made;
(v) The Interest Period for a Fixed Rate
Advance which is converted pursuant to
Section 5.09(b) shall commence on the date of such
conversion and shall expire on the date on which
the Interest Periods for the Fixed Rate Advances
of the other Lenders which were not converted
expires; and
(vi) No Interest Period with respect to the
Loans shall extend beyond the
Revolver/Multicurrency Maturity Date or Term Loan
Final Maturity Date, as applicable.
Section 5.05. Fees.
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(a) On the Closing Date, Interface shall pay to
the Domestic Agent, for the benefit of each Lender, an amendment
fee in an amount equal to $7500 for each such Lender.
(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 in
respect of the Domestic Syndicated Loan Commitments computed at a
per annum rate equal to the Applicable Commitment Fee Rate, 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 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 in respect of the Multicurrency
Syndicated Loan Commitments computed at a per annum rate equal to
the Applicable Commitment Fee Rate, 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.
(d) The Borrowers shall pay to the Domestic Agent
and Multicurrency Agent, as the case may be, an administration
fee equal to $500 for each Domestic Bid Rate Quote Request and
Multicurrency Bid Rate Quote Request, as the case may be,
transmitted by a Borrower to such Agent pursuant to Section
3.06(c) or 4.06(c). Such administration fees shall be payable in
arrears on the last calendar day of each fiscal quarter of
Interface and on the Revolver/Multicurrency Maturity Date, for
any period then ending for which such fees, if any, shall not
have been previously paid.
(e) The Borrowers shall pay to each Co-Agent a
quarterly administrative fee, payable in advance in the
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respective amount previously agreed in writing by Interface with
respect to such Co-Agent.
Section 5.06. Voluntary Prepayments of
Borrowings.
(a) The Borrowers may, at their option, prepay
Borrowings consisting of Base Rate Advances, and Domestic
Transaction Rate Advances and Multicurrency Transaction Rate
Advances (in either case to the extent not outstanding as Fixed
Rate Advances), at any time in whole, or from time to time in
part, in amounts aggregating $250,000 or any greater integral
multiple of $1000, by paying the principal amount to be prepaid
together with interest accrued and unpaid thereon to the date of
prepayment. Those Borrowings consisting of Fixed Rate Advances
may be prepaid, at the applicable Borrower's option, in whole, or
from time to time in part, in the respective minimum amounts and
multiples set forth in Sections 2.01(b), 3.02(b), 3.05(b),
3.06(b), 4.02(b), 4.05(b), and 4.06(b), as applicable to the Type
of Advance, by paying the principal amount to be prepaid,
together with interest accrued and unpaid thereon to the date of
prepayment, and all compensation payments pursuant to
Section 5.12 if such prepayment is made on a date other than the
last day of an Interest Period applicable thereto. Each such
optional prepayment shall be applied in accordance with
Section 5.06(c) below.
(b) Each Borrower desiring to make a prepayment
pursuant to Section 5.06(a) shall give written notice (or tele-
phonic notice confirmed in writing) to the Appropriate Co-Agent
of any intended prepayment (i) not less than one Business Day
prior to any prepayment of Base Rate Advances, or Domestic
Transaction Rate Advances or Multicurrency Transaction Rate
Advances (to the extent outstanding as Fixed Rate Advances),
(ii) not less than two Business Days prior to any prepayment of
CD Rate Advances, and (iii) not less than three Business Days
prior to any prepayment of Euro Advances, Domestic Bid Rate
Advances, or Multicurrency Bid Rate Advances. Such notice, once
given, shall be irrevocable. Upon receipt of such notice of
prepayment, the Appropriate Co-Agent shall promptly notify each
Lender whose Advance constitutes a portion of such Borrowing of
the contents of such notice and of such Lender's share of such
prepayment.
(c) Each Borrower providing notice of prepayment
pursuant to Section 5.06(b) may designate the Types of Advances
and the specific Borrowings that are to be prepaid, provided that
(i) if any prepayment of Fixed Rate Advances of such Borrower
made pursuant to a single Borrowing shall reduce the outstanding
Advances made pursuant to such Borrowing to an amount less than
$1,000,000, such Borrowing shall immediately be converted into
Base Rate Advances; and (ii) each prepayment made pursuant to a
single Borrowing shall be applied pro rata among the Loans com-
prising such Borrowing. In the absence of a designation by the
respective Borrower, the Co-Agents shall, subject to the forego-
ing, make such designation in their sole discretion. All volun-
tary prepayments shall be applied to the payment of interest be-
fore application to principal and shall be applied against sched-
uled amortization payments in the inverse order of maturity.
Section 5.07. Payments, etc.
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(a) (i) Except as otherwise specifically
provided herein, all payments under this Agreement, the Letter of
Credit Agreement, and the other Credit Documents, other than the
payments specified in Section 5.07(a)(ii) below, shall be made
without defense, set-off or counterclaim to the Domestic Agent
not later than 11:00 A.M. (Eastern time) on the date when due and
shall be made in Dollars in immediately available funds at its
Payment Office.
(ii) Except as otherwise specifically provided
herein, all payments under this Agreement with respect to the
Multicurrency Revolving Loans and the fees payable to the
Multicurrency Agent pursuant to Section 5.05(c), (d) and (e),
shall be made without defense, set-off or counterclaim to the
Multicurrency Agent at the applicable Payment Office not later
than 11:00 A.M. (Eastern time, in the case of such Agent, or
11:00 A.M. local time in the case of the applicable FC Bank, as
the case may be) on the date when due and in immediately
available funds in the applicable Currency, or at any other
location of the Multicurrency Agent as the Multicurrency Agent
may specify in writing to the Borrowers not later than Noon
(Eastern time) on the Business Day prior to the Business Day such
payment is due. All payments of principal and interest with
respect to the Multicurrency Syndicated Loans shall be made in
the Currency in which the related Borrowing was made.
(b) (i) Any and all payments by the Borrowers
hereunder or under the Notes or the Letter of Credit Agreement
shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender, taxes imposed on or
measured by its net income, and franchise taxes and branch profit
taxes imposed on it (A) by the jurisdiction under the laws of
which such Lender is organized or any political subdivision
thereof and, in the case of each Lender, taxes imposed on or
measured by its net income, and franchise taxes and branch profit
taxes imposed on it, by the jurisdiction of such Lender's
appropriate Lending Office or any political subdivision thereof,
and (B) by a jurisdiction in which any payments are to be made by
any Borrower hereunder, other than the United States of America,
the United Kingdom, or The Netherlands or any political subdivi-
sion of any thereof, and that would not have been imposed but for
the existence of a connection between such Lender and the juris-
diction imposing such taxes (other than a connection arising as a
result of this Agreement or the transactions contemplated by this
Agreement), except in the case of taxes described in this
clause (B), to the extent such taxes are imposed as a result of a
change in the law or regulations of any jurisdiction or any
applicable treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or ad-
ministration thereof after the date of this Agreement (all such
excluded net income taxes, franchise taxes and branch profit
taxes collectively referred to as the "Excluded Taxes"; all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being collectively referred to in
this Section 5.07(b) as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Note or the Letter of Credit
Agreement to any Lender, (x) the sum so payable shall be
increased by such amount (the "Gross-up Amount") as may be neces-
sary so that after making all required deductions (including de-
ductions with respect to Taxes owed by such Lender on the Gross-
- 66 -<PAGE>
up Amount payable under this Section 5.07(b)(i)) such Lender
receives an amount equal to the sum it would have received had no
such deductions been made, (y) such Borrower shall make such
deductions, and (z) such Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(ii) Each Borrower will indemnify each Lender for
the full amount of Taxes (together with any Taxes or Excluded
Taxes owed by such Lender applicable to the Gross-up Amount
payable under clause (x) of Section 5.07(b)(i) or on the
indemnification payments made by a Borrower under this
Section 5.07(b)(ii), but without duplication thereof), and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or
such Excluded Taxes were correctly or legally asserted, so as to
compensate such Lender for any loss, cost, expense or liability
incurred as a consequence of any such Taxes. Payment pursuant to
such indemnification shall be made within 10 Business Days from
the date such Lender makes written demand therefor.
(iii) Within 30 days after the date of any
Borrower's payment of Taxes, such Borrower will furnish to the
relevant Lender, at its appropriate Lending Office, the original
or a certified copy of a receipt evidencing payment thereof.
(iv) Each Lender that is a foreign Person (i.e.,
a Person other than a United States Person as defined in the
Internal Revenue Code of 1986, as amended) hereby agrees that:
(A) it shall, prior to the time it becomes a
Lender hereunder, deliver to Interface:
(1) for each Lending Office located in
the United States of America, three (3)
accurate and complete signed originals of
Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"), and/or
(2) for each Lending Office located
outside the United States of America, three
(3) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any
successor thereto ("Form 1001");
in each case indicating that such Lender, on the
date of delivery thereof, is entitled to receive
payments of principal, interest and fees for the
account of such Lending Office under this
Agreement, the Notes, and the Letter of Credit
Agreement free from withholding of United States
Federal income tax; provided, that if the Form
4224 or Form 1001, as the case may be, supplied by
a Lender fails to establish a complete exemption
from United States withholding tax as of the date
such Lender becomes a Lender, such Lender shall,
within 15 days after a written request from
Interface, deliver to Interface the forms or other
documents necessary to establish a complete
exemption from United States withholding tax as of
such date;
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(B) if at any time such Lender changes its
Lending Office or selects an additional Lending
Office, it shall, at the same time or reasonably
promptly thereafter (but only to the extent the
forms previously delivered by it hereunder are no
longer effective) deliver to Interface in
replacement for the forms previously delivered by
it hereunder:
(1) for such changed or additional
Applicable Lending Office located in the
United States of America, three (3) accurate
and complete signed originals of Form 4224;
or
(2) otherwise, three (3) accurate and
complete signed originals of Form 1001;
in each case indicating that such Lender is on the
date of delivery thereof entitled to receive
payments of principal, interest and fees for the
account of such changed or additional Lending
Office under this Agreement, the Notes, and the
Letter of Credit Agreement free from withholding
of United States Federal income tax.
(v) Each Multicurrency Lender hereby agrees that:
(A) it shall, prior to the time it becomes a
Multicurrency Syndicated Lender hereunder, deliver
to Interface with respect to each of its Lending
Offices, duly completed forms, or other evidence
reasonably satisfactory to Interface, establishing
that such Multicurrency Syndicated Lender, on the
date of delivery thereof, is entitled to receive
(i) payments of principal, interest and fees for
the account of such Lending Office under this
Agreement and the Notes without deduction and free
from withholding of any income taxes imposed by
The Netherlands, and (ii) payments of fees for the
account of such Lending Office under this
Agreement without deduction and free from
withholding of any income taxes imposed by the
United Kingdom; provided that if the forms or
other evidence supplied by the Multicurrency
Syndicated Lender fail to establish such a
complete exemption from withholding tax of The
Netherlands, or such a complete exemption from
withholding tax of the United Kingdom with respect
to payment of fees hereunder, as of the date such
Multicurrency Syndicated Lender becomes a
Multicurrency Syndicated Lender, such
Multicurrency Syndicated Lender shall, within
fifteen (15) days after a written request from
Interface, deliver to Interface the forms or other
documents necessary to establish such complete
exemption from withholding tax as of such date;
(B) it shall, as soon as practicable after
the date of this Agreement, file all appropriate
forms and take other appropriate action to obtain
a certificate or other appropriate document from
the United Kingdom Inland Revenue establishing
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that such Multicurrency Syndicated Lender, on the
date of delivery thereof, is entitled to receive
payments of principal and interest for the account
of its Lending Office under this Agreement and the
Notes without deduction and free from withholding
of any income taxes imposed by the United Kingdom;
provided that if the forms supplied by the
Multicurrency Syndicated Lender fail to establish
a complete exemption from withholding tax of the
United Kingdom as of the date of delivery thereof,
such Multicurrency Syndicated Lender shall, within
fifteen (15) days after a written request from
Interface, deliver to Interface the forms or other
evidence reasonably satisfactory to Interface to
establish a complete exemption from withholding
tax of the United Kingdom as of such date; and
(C) if at any time the Multicurrency
Syndicated Lender changes its Lending Office or
selects an additional Lending Office, it shall, at
the same time or reasonably promptly thereafter
(but only to the extent the forms previously
delivered by it hereunder are no longer
effective), deliver to Interface in replacement
for the forms previously delivered by it hereun-
der, such additional duly completed forms
establishing that such Multicurrency Syndicated
Lender is on the date of delivery thereof entitled
to receive payments of principal, interest and
fees for the account of such changed or additional
Lending Office under this Agreement free from
withholding of United Kingdom or The Netherlands
income tax (to the extent such forms are required
under the laws of the relevant jurisdiction to es-
tablish such exemption).
(vi) In addition to the documents to be furnished
pursuant to Section 5.07(b)(iv) and (v), each Lender shall,
promptly upon the reasonable written request of Interface to that
effect, deliver to Interface such other accurate and complete
forms or similar documentation as such Lender is legally able to
provide and as may be required from time to time by any
applicable law, treaty, rule or regulation of any jurisdiction in
order to establish such Lender's tax status for withholding
purposes or as may otherwise be appropriate to eliminate or
minimize any Taxes on payments under this Agreement, the Notes,
or the Letter of Credit Agreement. Each Lender furnishing forms
to Interface pursuant to the requirements of Section 5.07(b)(iv)
and (v), and this clause (vi), shall furnish copies of such forms
to the Appropriate Co-Agent at the same time delivery of such
forms is made to Interface.
(vii) No Borrower shall be required to pay any
amounts pursuant to Section 5.07(b)(i) or (ii) to any Lender for
the account of any Lending Office of such Lender in respect of
any United States withholding taxes payable hereunder (and a
Borrower, if required by law to do so, shall be entitled to
withhold such amounts and pay such amounts to the United States
Government) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender to comply
with its obligations under Section 5.07(b)(iv), and such Lender
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shall not be entitled to exemption from deduction or withholding
of United States Federal income tax in respect of the payment of
such sum by any Borrower hereunder for the account of such
Lending Office for, in each case, any reason other than a change
in United States law or regulations or any applicable tax treaty
or regulations or in the official interpretation of any such law,
treaty or regulations by any governmental authority charged with
the interpretation or administration thereof (whether or not hav-
ing the force of law) after the date such Lender became a Lender
hereunder.
(viii) No Borrower shall be required to pay any
amounts pursuant to Section 5.07(b)(i) or (ii) to any
Multicurrency Syndicated Lender for the account of any Lending
Office of such Lender in respect of any United Kingdom or The
Netherlands withholding taxes payable hereunder (and a Borrower,
if required by law to do so, shall be entitled to withhold such
amounts and pay such amounts to the governments of the United
Kingdom or The Netherlands, as the case may be) if the obligation
to pay such additional amounts would not have arisen but for a
failure by such Multicurrency Syndicated Lender to comply with
its obligations under Section 5.07(b)(v), and such Multicurrency
Syndicated Lender shall not be entitled to exemption from de-
duction or withholding of United Kingdom or The Netherlands
income tax in respect of the payment of such sum by any Borrower
hereunder for the account of such Lending Office for, in each
case, any reason other than a change in United Kingdom or The
Netherlands law or regulations or any applicable tax treaty or
regulations or in the official interpretation of any such law,
treaty or regulations, by any governmental authority charged with
the interpretation or administration thereof (whether or not
having the force of law) after the date such Multicurrency
Syndicated Lender became a Multicurrency Syndicated Lender
hereunder.
(ix) Within sixty (60) days of the written request
of Interface, each Lender shall execute and deliver such
certificates, forms or other documents, which can be reasonably
furnished consistent with the facts and which are reasonably
necessary to assist in applying for refunds of Taxes remitted
hereunder.
(x) Each Lender shall use reasonable efforts to
avoid or minimize any amounts which might otherwise be payable by
Borrowers pursuant to this Section 5.07(b), except to the extent
that a Lender determines that such efforts would be
disadvantageous to such Lender, as determined by such Lender and
which determination, if made in good faith, shall be binding and
conclusive on all parties hereto.
(xi) To the extent that the payment of any
Lender's Taxes by any Borrower gives rise from time to time to a
Tax Benefit (as hereinafter defined) to such Lender in any
jurisdiction other than the jurisdiction which imposed such
Taxes, such Lender shall pay to such Borrower the amount of each
such Tax Benefit so recognized or received. The amount of each
Tax Benefit and, therefore, payment to such Borrower will be
determined from time to time by the relevant Lender in its sole
discretion, which determination shall be binding and conclusive
on all parties hereto. Each such payment will be due and payable
by such Lender to such Borrower within a reasonable time after
the filing of the income tax return in which such Tax Benefit is
recognized or, in the case of any tax refund, after the refund is
received; provided, however, if at any time thereafter such
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Lender is required to rescind such Tax Benefit or such Tax
Benefit is otherwise disallowed or nullified, the Borrower shall
promptly, after notice thereof from such Lender, repay to Lender
the amount of such Tax Benefit previously paid to the Borrower
and rescinded, disallowed or nullified. For purposes of this
section, "Tax Benefit" shall mean the amount by which any
Lender's income tax liability for the taxable period in question
is reduced below what would have been payable had the Borrower
not been required to pay the Lender's Taxes. In case of any
dispute with respect to the amount of any payment the Borrowers
shall have no right to any offset or withholding of payments with
respect to future payments due to any Lender under this
Agreement, the Notes, or the Letter of Credit Agreement.
(xii) Without prejudice to the survival of any
other agreement of the Borrowers hereunder, the agreements and
obligations of the Borrowers and the Lenders contained in this
Section 5.07(b) shall survive the termination of this Agreement
and the payment in full of the principal of, premium, if any,
interest, and fees hereunder and under the Notes and the Letter
of Credit Agreement.
(f) Subject to Section 5.04(ii), whenever any
payment to be made hereunder or under any Note or the Letter of
Credit Agreement shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the applicable
rate during such extension.
(g) All computations of interest and fees
hereunder and under the Notes and the Letter of Credit Agreement
shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed),
except that interest on Eurocurrency Advances outstanding in
British pounds sterling shall be computed on the basis of a year
of 365 days for the actual number of days. Interest on Base Rate
Advances, and Domestic Transaction Rate Advances and
Multicurrency Transaction Rate Advances (to the extent not
outstanding as Fixed Rate Advances), shall be calculated based on
the Base Rate, Domestic Transaction Rate, or Multicurrency
Transaction Rate, as the case may be, from and including the date
of such Loan to but excluding the date of the repayment or
conversion thereof. Interest on Fixed Rate Advances shall be
calculated as to each Interest Period from and including the
first day thereof to but excluding the last day thereof. Each
determination by either Co-Agent of an interest rate or fee
hereunder shall be made in good faith and, except for manifest
error, shall be final, conclusive and binding for all purposes.
(h) Payment by any Borrower to the Appropriate
Co-Agent in accordance with the terms of this Agreement or the
Letter of Credit Agreement shall, as to such Borrower, constitute
payment to the applicable Lenders under this Agreement or the
Letter of Credit Agreement, as the case may be.
Section 5.08. Interest Rate Not Ascertainable,
etc. In the event that the Appropriate Co-Agent shall have
determined (which determination shall be made in good faith and,
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absent manifest error, shall be final, conclusive and binding
upon all parties) that on any date for determining the Adjusted
LIBO Rate, Special Adjusted LIBO Rate or the Fixed CD Rate for
any Interest Period, by reason of any changes arising after the
date of this Agreement affecting the London interbank market or
the United States secondary certificate of deposit market, as the
case may be, or the Appropriate Co-Agent's position in such
markets, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate, Special Adjusted LIBO Rate or
Fixed CD Rate, as the case may be, then, and in any such event,
the Appropriate Co-Agent shall forthwith give notice (by
telephone confirmed in writing) to Interface and to the Lenders
of such determination and a summary of the basis for such
determination. Until the Appropriate Co-Agent notifies Interface
that the circumstances giving rise to the suspension described
herein no longer exist, the obligations of the Lenders to make or
permit portions of the Domestic Syndicated Loans, Term Loans, or
Multicurrency Syndicated Loans to remain outstanding as CD Rate
Advances, Special Adjusted LIBO Rate or Euro Advances as the case
may be, shall be suspended, and such affected Advances shall bear
the same interest as Base Rate Advances.
Section 5.09. Illegality.
(a) In the event that any Lender shall have
determined (which determination shall be made in good faith and,
absent manifest error, shall be final, conclusive and binding
upon all parties) at any time that the making or continuance of
any Fixed Rate Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful), then, in any such event, the Lender shall give prompt
notice (by telephone confirmed in writing) to Interface and to
the Appropriate Co-Agent of such determination and a summary of
the basis for such determination (which notice the Appropriate
Co-Agent shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Interface
referred to in subsection (a) above, (i) each Borrower's right to
request and such Lender's obligation to fund portions of CD Rate
Advances or Euro Advances, as the case may be, shall be
immediately suspended, and such Lender shall make a Loan as part
of the requested Borrowing consisting of a CD Rate Advance or
Euro Advance, as the case may be, as a Base Rate Advance, which
Base Rate Advance shall, for all other purposes, be considered
part of such Borrowing, and (ii) if the affected Fixed Rate
Advance is then outstanding, the applicable Borrower shall
immediately, or if permitted by applicable law, no later than the
date permitted thereby, upon at least one Business Day's written
notice to the Appropriate Co-Agent and the affected Lender,
convert the affected Lender's portion of such Advance into a Loan
of a different Type with an Interest Period ending on the date on
which the Interest Period applicable to the affected Fixed Rate
Advances expires, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated
the same pursuant to this Section 5.09(b).
Section 5.10. Increased Costs.
(a) If, by reason of (x) after the date hereof,
the introduction of or any change (including, without limitation,
any change by way of imposition or increase of reserve
- 72 -<PAGE>
requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request
from any central bank or other governmental authority or quasi-
governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending
Office) shall be subject to any tax, duty or other
charge with respect to its portion of a Fixed Rate
Advance or its obligation to fund a portion of a
Fixed Rate Advance, or the basis of taxation of
payments to any Lender of the principal of or
interest on its portion of a Fixed Rate Advance or
its obligation to fund a portion of a Fixed Rate
Advance shall have changed (except for changes in
the tax on the overall net income of such Lender
or its applicable Lending Office imposed by the
jurisdiction in which such Lender's principal
executive office or applicable Lending Office is
located); or
(ii) any reserve (including, without
limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits
with or for the account of, or credit extended by,
any Lender's applicable Lending Office shall be
imposed or deemed applicable or any other
condition affecting its portion of a Fixed Rate
Advance or its obligation to fund a portion of a
Fixed Rate Advance shall be imposed on any Lender
or its applicable Lending Office or the London
interbank market or the United States secondary
certificate of deposit market;
and as a result thereof there shall be any increase in the cost
to such Lender of agreeing to make or making, funding or
maintaining a portion of a Fixed Rate Advance (except to the
extent already included in the determination of the applicable
interest rate in effect for such portion of the Fixed Rate
Advance), or there shall be a reduction in the amount received or
receivable by such Lender or its applicable Lending Office, then
the Borrowers shall from time to time (subject, in the case of
certain Taxes, to the applicable provisions of Section 5.07(b)),
upon written notice from and demand by such Lender on Interface
(with a copy of such notice and demand to the Appropriate
Co-Agent), pay to the Appropriate Co-Agent for the account of
such Lender, within five Business Days after the date of such
notice and demand, additional amounts sufficient to indemnify
such Lender against such increased cost. A certificate as to the
amount of such increased cost, submitted to Interface and the
Appropriate Co-Agent by such Lender in good faith and accompanied
by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost,
shall, except for manifest error, be final, conclusive and
binding for all purposes.
(b) If any Lender shall advise either Co-Agent
that at any time, because of the circumstances described in
clauses (x) or (y) in Section 5.10(a) or any other circumstances
beyond such Lender's reasonable control arising after the date of
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this Agreement affecting such Lender or the London interbank
market or the United States secondary certificate of deposit
market or such Lender's position in such markets, the Adjusted
LIBO Rate, the Special Adjusted LIBO Rate or the Fixed CD Rate,
as the case may be, as determined by the Appropriate Co-Agent,
will not adequately and fairly reflect the cost to such Lender of
funding its portion of a Fixed Rate Advance, then, and in any
such event:
(i) the Appropriate Co-Agent shall forthwith
give notice (by telephone confirmed in writing) to
Interface and to the other Lenders of such advice;
(ii) the Borrowers' right to request and such
Lender's obligation to make or permit portions of
the Loans to remain outstanding as a CD Rate
Advance or Eurocurrency Advance, as the case may
be, shall be immediately suspended; and
(iii) such Lender shall make a Loan as part of
the requested Borrowing consisting of a CD Rate
Advance or Euro Advance, as the case may be, as a
Base Rate Advance, which such Base Rate Advance
shall, for all other purposes, be considered part
of such Borrowing; provided however, in the event
that any Lender determines with respect to a
Eurocurrency Advance that while the Adjusted LIBO
Rate will not adequately and fairly reflect the
costs of such Lender but the Special Adjusted LIBO
Rate would adequately and fairly reflect such
costs, then such Lender's portion of such
requested Borrowing shall bear interest based upon
the Special Adjusted LIBO Rate, if available.
Section 5.11. Lending Offices.
(a) Each Lender agrees that, if requested by the
Borrowers, it will use reasonable efforts (subject to overall
policy considerations of such Lender) to designate an alternate
Lending Office with respect to any of its portions of Fixed Rate
Advances affected by the matters or circumstances described in
Sections 5.07(b), 5.08, 5.09 or 5.10 to reduce the liability of
the Borrowers or avoid the results provided thereunder, so long
as such designation is not disadvantageous to such Lender as
determined by such Lender, which determination if made in good
faith, shall be conclusive and binding on all parties hereto.
Nothing in this Section 5.11 shall affect or postpone any of the
obligations of any Borrower or any right of any Lender provided
hereunder.
(b) If any Lender that is organized under the
laws of any jurisdiction other than the United States of America
or any State thereof (including the District of Columbia) issues
a public announcement with respect to the closing of its lending
offices in the United States such that any withholdings or
deductions and additional payments with respect to Taxes may be
required to be made by any Borrower thereafter pursuant to
Section 5.07(b), such Lender shall use reasonable efforts to
furnish Interface notice thereof as soon as practicable
thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge the
Borrowers from their obligations to such Lender pursuant to
Section 5.07(b) or otherwise result in any liability of such
Lender.
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Section 5.12. Funding Losses. Each Borrower
shall compensate each Lender, upon its written request to
Interface (which request shall set forth the basis for requesting
such amounts in reasonable detail and which request shall be made
in good faith and, absent manifest error, shall be final,
conclusive and binding upon all of the parties hereto), for all
losses, expenses and liabilities (including, without limitation,
any interest paid by such Lender to lenders of funds borrowed by
it to make or carry its portions of Fixed Rate Advances, and any
amounts required to be paid by any Multicurrency Syndicated
Lender as a result of currency fluctuations of Currencies
borrowed by it to make or carry Multicurrency Syndicated Loans,
in either case to the extent not recovered by such Lender in
connection with the re-employment of such funds or Currencies and
including loss of anticipated profits), which the Lender may sus-
tain: (i) if for any reason (other than a default by such
Lender) a borrowing of, or conversion to or continuation of,
Fixed Rate Advances to such Borrower does not occur on the date
specified therefor in a notice given by any Borrower to either
Co-Agent as provided herein (whether or not withdrawn), (ii) if
any repayment (including mandatory prepayments and any
conversions pursuant to Section 5.09(b)) of any Fixed Rate Ad-
vances to such Borrower occurs on a date which is not the last
day of an Interest Period applicable thereto, or (iii), if, for
any reason, such Borrower defaults in its obligation to repay its
Fixed Rate Advances when required by the terms of this Agreement.
Section 5.13. Failure to Pay in Appropriate
Currency. If any Borrower is unable for any reason to effect
payment of a Multicurrency Syndicated Loan in the appropriate
Currency as required by Section 5.07(a)(ii) or if any Borrower
shall default in the payment when due of any payment in the
appropriate Currency, the Multicurrency Syndicated Lenders may,
at their option, require such payment to be made to the
Multicurrency Agent in the Dollar Equivalent of such Currency at
the Multicurrency Agent's Payment Office specified for payments
of Eurocurrency Advances outstanding in Dollars. In any such
case, each Borrower agrees to hold the Multicurrency Syndicated
Lenders harmless from any loss incurred by the Multicurrency
Syndicated Lenders arising from any change in the value of
Dollars in relation to such Currency between the date such
payment became due and the date of payment thereof.
Section 5.14. Assumptions Concerning Funding of
Fixed Rate Advances. Calculation of all amounts payable to a
Lender under this Article V shall be made as though that Lender
had actually funded its portions of relevant Fixed Rate Advances
through the purchase of deposits in the relevant market and
Currency, as the case may be, bearing interest at the rate
applicable to such Fixed Rate Advances in an amount equal to the
amount of its portions of the Fixed Rate Advances and having a
maturity comparable to the relevant Interest Period and, in the
case of Eurocurrency Advances, through the transfer of such
Eurocurrency Advances from an offshore office of that Lender to a
domestic office of that Lender in the United States of America;
provided however, that each Lender may fund its portions of each
of the Fixed Rate Advances in any manner it sees fit and the
foregoing assumption shall be used only for calculation of
amounts payable under this Article V.
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Section 5.15. Apportionment of Payments.
Aggregate principal and interest payments in respect of Loans and
payments in respect of Letters of Credit, facility fees,
commitment fees, and Letter of Credit fees shall be apportioned
among all outstanding Commitments, Loans and Letters of Credit to
which such payments relate, proportionately to the Lenders'
respective Pro Rata Shares of such Commitments and outstanding
Loans and Letters of Credit. The Appropriate Co-Agent shall
promptly distribute to each Lender at its primary address set
forth beside its name on the appropriate signature page hereof or
such other address as any Lender may request its share of all
such payments received by the Appropriate Co-Agent.
Section 5.16. Sharing of Payments, Etc. If any
Lender shall obtain any payment or reduction (including, without
limitation, any amounts received as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code) of
any obligation of any Borrower hereunder or under the Letter of
Credit Agreement (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its
Pro Rata Share or L/C Pro Rata Share, as the case may be, of
payments or reductions on account of such obligations obtained by
all the Lenders, such Lender shall forthwith (i) notify each of
the other Lenders and the Co-Agents of such receipt, and
(ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net
of costs incurred in connection therewith, ratably with each of
them, provided that if all or any portion of such excess payment
or reduction is thereafter recovered from such purchasing Lender
or additional costs are incurred, the purchase shall be rescinded
and the purchase price restored to the extent of such recovery or
such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on
such funds. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 5.16
may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation.
Section 5.17. Capital Adequacy. Without limiting
any other provision of this Agreement or the Letter of Credit
Agreement, in the event that any Lender shall have determined
that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy not
currently in effect or fully applicable as of the Closing Date,
or any change therein or in the interpretation or application
thereof, or compliance by such Lender with any request or
directive regarding capital adequacy not currently in effect or
fully applicable as of January 9, 1995 (whether or not having the
force of law and whether or not failure to comply therewith would
be unlawful) from a central bank or governmental authority or
body having jurisdiction, does or shall have the effect of
reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder or under the Letter of
Credit Agreement to a level below that which such Lender could
have achieved but for such law, treaty, rule, regulation,
guideline or order, or such change or compliance (taking into
consideration such Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then
within ten Business Days after written notice and demand by such
Lender (with copies thereof to the Co-Agents), each Borrower
shall from time to time pay to such Lender additional amounts
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sufficient to compensate such Lender for such reduction (but, in
the case of outstanding Base Rate Advances, without duplication
of any amounts already recovered by such Lender by reason of an
adjustment in the applicable Base Rate). Each certificate as to
the amount payable under this Section 5.17 (which certificate
shall set forth the basis for requesting such amounts in
reasonable detail), submitted to Interface by any Lender in good
faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
Section 5.18. Benefits to Guarantors. In
consideration for the execution and delivery by the Guarantors
(other than Interface) of their Guaranty Agreement, the Borrowers
agree to make the benefit of extensions of credit hereunder
available to the Guarantors.
Section 5.19. Limitation on Certain Payment
Obligations.
(a) Each Lender or Agent shall make written
demand on Interface for indemnification or compensation pursuant
to Section 5.07 no later than 90 days after the earlier of
(i) the date on which such Lender or Agent makes payment of such
Taxes, and (ii) the date on which the relevant taxing authority
or other governmental authority makes written demand upon such
Lender or Agent for payment of such Taxes.
(b) Each Lender or Agent shall make written
demand on Interface for indemnification or compensation pursuant
to Sections 5.12 and 5.13 no later than 90 days after the event
giving rise to the claim for indemnification or compensation
occurs.
(c) Each Lender or Agent shall make written
demand on Interface for indemnification or compensation pursuant
to Sections 5.09 and 5.17 no later than 90 days after such Lender
or Agent receives actual notice or obtains actual knowledge of
the promulgation of a law, rule, order or interpretation or
occurrence of another event giving rise to a claim pursuant to
such sections.
(d) In the event that the Lenders or Agents fail
to give Interface notice within the time limitations prescribed
in (a) or (b) above, neither Interface nor any other Borrower
shall have any obligation to pay such claim for compensation or
indemnification. In the event that the Lender or Agents fail to
give Interface notice within the time limitation prescribed in
(c) above, neither Interface nor any other Borrower shall have
any obligation to pay any amount with respect to claims accruing
prior to the ninetieth day preceding such written demand.
Section 5.20. Application of Loan Proceeds to
Maturing Loans. Notwithstanding the provisions of Sections
3.02(d), 3.05(c), 3.06(d), 4.02(d), 4.05(c), and 4.06(d)
requiring the Lenders to make available proceeds of their
respective Loans to the Domestic Agent or Multicurrency Agent, as
the case may be, in connection with the Borrowing of Domestic
Revolving Loans and Multicurrency Revolving Loans, to the extent
that a Loan previously made by a Lender matures on the date of
any such Borrowing of a requested Loan, such Lender shall apply
that portion of the proceeds of the Loan it is then making
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sufficient to effect the repayment of principal of the maturing
Loan owing to it, with any excess proceeds to be made available
to the applicable Borrower as contemplated herein.
ARTICLE VI.
CONDITIONS TO BORROWINGS
The obligation of each Lender to make Advances to
the Borrowers hereunder is subject to the satisfaction of the
following conditions:
Section 6.01. Conditions Precedent to
Effectiveness of Second Amended and Restated Credit Agreement.
In order for this Second Amended and Restated Credit Agreement to
become effective on the Closing Date, all obligations of the
Borrowers hereunder incurred at or prior to such date
(including, without limitation, the Borrowers' obligations to
reimburse the reasonable fees and expenses of counsel to the Co-
Agents and any fees and expenses payable to the Co-Agents and the
Lenders as previously agreed with Interface), shall have been
paid in full, and the Co-Agents shall have received the
following, in form and substance satisfactory in all respects to
the Co-Agents:
(a) the duly executed counterparts of
this Agreement;
(b) the duly completed Notes;
(c) the Guaranty Agreements, Contribution
Agreement, and Indemnity Agreement;
(d) the Pledge Agreements accompanied,
to the extent relevant under applicable law, by
(i) all stock certificates representing the
Pledged Stock, (ii) stock powers for those shares
duly executed in blank, (iii) Uniform Commercial
Code financing statements relating thereto, and
(iv) any other documentation requested by the
Collateral Agent in order to assure the perfection
of a first priority lien in such Pledged Stock in
favor of the Collateral Agent for the benefit of
the Lenders;
(e) certificate of the Borrowers in
substantially the form of Exhibit F attached
hereto and appropriately completed;
(f) certificates of the Secretary or
Assistant Secretary of each of the Credit Parties
(or, in the case of any Foreign Subsidiary, a
comparable company officer)
attaching and certifying copies of the resolutions
of the boards of directors (or, in the case of any
Foreign Subsidiary, the comparable governing body
of such entity) of the Credit Parties, authorizing
as applicable (i) the execution, delivery and
performance of the Credit Documents, and (ii) the
granting of the pledges and security interests
granted pursuant to the Pledge Agreements and the
L/C Cash Collateral Assignment;
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(g) certificates of the Secretary or an
Assistant Secretary of each of the Credit Parties
(or, in the case of any Foreign Subsidiary, a
comparable company officer) certifying (i) the
name, title and true signature of each officer of
such entities executing the Credit Documents, and
(ii) the bylaws or comparable governing documents
of such entities;
(h) certified copies of the certificate or
articles of incorporation of each Credit Party (or
comparable organizational document of each Foreign
Subsidiary), together with certificates of good
standing or existence, as may be available from
the Secretary of State (or comparable office or
registry for each Foreign Subsidiary) of the
jurisdiction of incorporation or organization of
such Credit Party;
(i) examination reports from the Uniform
Commercial Code records of Cobb County and Troup
County, Georgia, the Georgia Superior Court Clerks
Cooperative Authority, and the Secretaries of
State of the States of California, Maine,
Michigan, Pennsylvania and Texas, in each case
showing no outstanding liens or security interests
granted by any Credit Party other than (x) Liens
permitted by Section 9.02, and (y) Liens in favor
of the Collateral Agent (whether acting under this
Agreement or the 1997 Term Loan Agreement);
(j) copies of all documents and
instruments, including all consents,
authorizations and filings, required or advisable
under any Requirement of Law or by any material
Contractual Obligation of the Credit Parties, in
connection with the execution, delivery,
performance, validity and enforceability of the
Credit Documents and the other documents to be ex-
ecuted and delivered hereunder, and such consents,
authorizations, filings and orders shall be in
full force and effect and all applicable waiting
periods shall have expired;
(k) certified copies of the Intercompany
Loan Documents;
(l) acknowledgments from each of G.
Kimbrough Taylor, Jr. and Kilpatrick Stockton LLP
as to their appointment as agent for service of
process for the various Credit Parties;
(m) the Letter of Credit Agreement, the
L/C Cash Collateral Assignment, the IRB Collateral
Documents, together with all certificates,
opinions, documents and instruments required to be
furnished to the L/C Issuer pursuant to Section
3.1 of the Letter of Credit Agreement;
(n) certified copies of indentures, credit
agreements, instruments, and other documents
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evidencing or securing Indebtedness of any
Consolidated Company described on Schedule 9.01(b)
or Schedule 9.01(j), in any single case in an
amount not less than $2,000,000 (or the Dollar
Equivalent thereof);
(o) [Intentionally omitted];
(p) certificates, reports and other
information as the Co-Agents may request from any
Consolidated Company in order to satisfy the
Lenders as to the absence of any material li-
abilities or obligations arising from matters
relating to employees of the Consolidated
Companies, including employee relations,
collective bargaining agreements, Plans, Foreign
Plans, and other compensation and employee benefit
plans;
(q) certificates, reports, environmental
audits and investigations, and other information
as the Co-Agents may request from any Consolidated
Company in order to satisfy the Lenders as to the
absence of any material liabilities or obligations
arising from environmental and employee health and
safety exposures to which the Consolidated
Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(r) certificates, reports and other
information as the Co-Agents may request from any
Consolidated Company in order to satisfy the
Lenders as to the absence of any material li-
abilities or obligations arising from litigation
(including without limitation, products liability
and patent infringement claims) pending or
threatened against the Consolidated Companies;
(s) a summary, set forth in format and
detail acceptable to the Co-Agents, of the types
and amounts of insurance (property and liability)
maintained by the Consolidated Companies;
(t) the favorable opinions of (i) Kilpatrick
Stockton LLP, United States counsel to the Credit
Parties, substantially in the form of Exhibit G-1,
(ii) Paisner & Co., United Kingdom counsel to
Europe Limited substantially in the form of
Exhibit G-2, and (iii) Nauta Dutilh, Netherlands
counsel to Scherpenzeel B.V. substantially in the
form of Exhibit G-3, in each case addressed to the
Co-Agents and each of the Lenders, and covering
such other matters as either Co-Agent or any
Lender may reasonably request;
(u) the favorable opinions of Clifford
Chance, special counsel to the Co-Agents and the
Lenders, as to any matters relating to the Credit
Documents under the laws of the United Kingdom and
the Netherlands as may be requested by the Co-
Agents;
(v) the favorable opinion of Allen, Allen &
Hemsley (or Allens Arthur Robinson), special
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Australian counsel to the Co-Agents and the
Lenders, as to any matters relating to the Credit
Documents arising under Australian law as may be
requested by the Co-Agents; and
(w) the favorable opinion of McCarthy
Tetrault, special Canadian counsel to the Co-
Agents and the Lenders, as to any matters relating
to the Credit Documents arising under Canadian law
as may be requested by the Co-Agents.
In addition to the foregoing, the following conditions shall have
been satisfied or shall have existed, all to the satisfaction of
the Co-Agents, as of the time this Second Amended and Restated
Credit Agreement becomes effective:
(x) the Loans to be made on the Closing Date
and the use of proceeds thereof shall not have
contravened, violated or conflicted with, or
involved the Co-Agents or any Lender in a vio-
lation of, any law, rule, injunction, or
regulation, or determination of any court of law
or other governmental authority;
(y) all corporate proceedings and all other
legal matters in connection with the
authorization, legality, validity and
enforceability of the Credit Documents shall have
been reasonably satisfactory in form and substance
to the Required Lenders; and
(z) Interface shall have paid to the Domestic
Agent (i) from the proceeds of the 1997 Term Loan,
(A) $50,000,000 for application against the
outstanding Domestic Revolving Loans, and (B)
$25,000,000 for application against the
outstanding Term Loans, and (ii) interest accrued
and unpaid on the Loans paid as described in
clause (i) to the date of such payment, and all
compensation payments pursuant to Section 5.12.
Section 6.02. Conditions to Initial Loans to
Europe Limited. Prior to the making of the initial Multicurrency
Syndicated Loans to Europe Limited, Interface and the
Multicurrency Agent shall have received with respect to Europe
Limited the forms required to be furnished by the Multicurrency
Syndicated Lenders pursuant to Section 5.07(b)(v)(B) or such
other satisfactory evidence, in each case, establishing a
complete exemption for such Multicurrency Syndicated Lender from
United Kingdom withholding tax for payments of all principal and
interest from Europe Limited.
Section 6.03. Conditions to All Loans. At the
time of the making of all Loans (before as well as after giving
effect to such Loans and the proposed use of the proceeds
thereof), the following conditions shall have been satisfied or
shall exist:
(a) there shall exist no Default or Event of
Default;
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(b) all representations and warranties by
Interface contained herein, and all
representations and warranties by the other
Borrowers contained herein, shall be true and cor-
rect in all material respects with the same effect
as though such representations and warranties had
been made on and as of the date of such Loans
(except that the representation and warranty set
forth in Section 7.19 shall not be deemed to
relate to any time subsequent to the date of the
initial Loans hereunder);
(c) since the date of the most recent
financial statements of the Consolidated Companies
described in Section 7.14(a), there shall have
been no change which has had or could reasonably
be expected to have a Materially Adverse Effect
(whether or not any notice with respect to such
change has been furnished to the Lenders pursuant
to Section 8.07);
(d) there shall be no action or proceeding
instituted or pending before any court or other
governmental authority or, to the knowledge of any
Borrower, threatened (i) which reasonably could be
expected to have a Materially Adverse Effect, or
(ii) seeking to prohibit or restrict one or more
Credit Party's ownership or operation of any
portion of its business or assets, or to compel
one or more Credit Party to dispose of or hold
separate all or any portion of its businesses or
assets, where such portion or portions of such
business(es) or assets, as the case may be,
constitute a material portion of the total
businesses or assets of the Consolidated
Companies;
(e) the Loans to be made and the use of
proceeds thereof shall not contravene, violate or
conflict with, or involve the Co-Agents or any
Lender in a violation of, any law, rule,
injunction, or regulation, or determination of any
court of law or other governmental authority
applicable to any of the Borrowers; and
(f) Interface shall have given to the Co-
Agents with its notice of Borrowing written notice
of its intent to use any proceeds of any Loan then
being requested for the purchase or carrying of
any "margin stock" (as defined in the Margin
Regulations); and
(g) The Co-Agents shall have received such
other documents (including, without limitation,
any necessary Federal Reserve Form U-1 or other
similar form required by the Margin Regulations)
or legal opinions as the Co-Agents or any Lender
may reasonably request, all in form and substance
reasonably satisfactory to the Co-Agents.
Each request for a Borrowing and the acceptance by
each Borrower of the proceeds thereof shall constitute a
representation and warranty by such Borrower, as of the date of
the Loans comprising such Borrowing, that the applicable
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conditions specified in Sections 6.01 and 6.03 (and Section 6.02
with respect to Europe Limited) have been satisfied.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
Each of Interface (as to itself and all other
Consolidated Companies, whether or not Interface is a Borrower
hereunder) and each of the other Borrowers (as to itself and all
of its Subsidiaries) represents and warrants as follows:
Section 7.01. Organizational Existence;
Compliance with Law. Each of the Consolidated Companies is duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its organization, and each of the Credit
Parties has the corporate or other organizational power and
authority and the legal right to own and operate its property
and to conduct its business. Each of the Consolidated Companies
(i) other than the Credit Parties, has the corporate or other
organizational power and authority and the legal right to own and
operate its property and to conduct its business, (ii) is duly
qualified as a foreign corporation or other organization and in
good standing under the laws of each jurisdiction where its
ownership of property or the conduct of its business requires
such qualification, and (iii) is in compliance with all
Requirements of Law, where (a) with respect to those Consolidated
Companies that are not Credit Parties, the failure to have such
power, authority and legal right as set forth in clause (i),
(b) the failure to be so qualified or in good standing as set
forth in clause (ii), or (c) the failure to comply with
Requirements of Law as set forth in clause (iii), would rea-
sonably be expected, in the aggregate, to have a Materially Ad-
verse Effect. The jurisdiction of incorporation or organization,
and the ownership of all issued and outstanding capital stock or
other equity interests, for each Subsidiary as of the date of
this Agreement is accurately described on Schedule 7.01.
Section 7.02. Organizational Power;
Authorization. Each of the Credit Parties has the corporate or
other organizational power and authority to make, deliver and
perform the Credit Documents to which it is a party and has taken
all necessary corporate or other organizational action to
authorize the execution, delivery and performance of such Credit
Documents. No consent or authorization of, or filing with, any
Person (including, without limitation, any governmental
authority), is required in connection with the execution,
delivery or performance by any Credit Party, or the validity or
enforceability against any Credit Party, of the Credit Documents,
other than (i) such consents, authorizations or filings which
have been made or obtained (including without limitation, any
necessary consultations with any Credit Party's supervisory
board, works council ("Ondernemingsraad") or similar body), and
(ii) customary filings to perfect the Liens in favor of the
Collateral Agent granted in the IRB Collateral Documents.
Section 7.03. Enforceable Obligations. This
Agreement has been duly executed and delivered, and each other
Credit Document will be duly executed and delivered, by the
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respective Credit Parties, and this Agreement constitutes, and
each other Credit Document when executed and delivered will
constitute, legal, valid and binding obligations of the Credit
Parties, respectively, enforceable against the Credit Parties in
accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
Section 7.04. No Legal Bar. The execution,
delivery and performance by the Credit Parties of the Credit
Documents will not violate any Requirement of Law or cause a
breach or default under any of their respective Contractual
Obligations.
Section 7.05. No Material Litigation. Except as
set forth on Schedule 7.05 or in any notice furnished to the
Lenders pursuant to Section 8.07(i) at or prior to the respective
times the representations and warranties set forth in this
Section 7.05 are made or deemed to be made hereunder, no
litigation, investigations or proceedings of or before any
courts, tribunals, arbitrators or governmental authorities are
pending or, to the knowledge of any Borrower, threatened by or
against any of the Consolidated Companies, or against any of
their respective properties or revenues, existing or future
(a) with respect to any Credit Document, or any of the
transactions contemplated hereby or thereby, or (b) which, if
adversely determined, would reasonably be expected to have a
Materially Adverse Effect.
Section 7.06. Investment Company Act, Etc. None
of the Credit Parties is an "investment company" or a company
"controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940,
as amended). None of the Credit Parties is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed,
guarantee such indebtedness, or pledge its assets to secure such
indebtedness, as contemplated hereby or by any other Credit Docu-
ment.
Section 7.07. Margin Regulations. No part of the
proceeds of any of the Loans will be used for any purpose which
violates, or which would be inconsistent or not in compliance
with, the provisions of the applicable Margin Regulations.
Section 7.08. Compliance With Environmental Laws.
(a) The Consolidated Companies have received no
notices of claims or potential liability under, and are in
compliance with, all applicable Environmental Laws, where such
claims and liabilities under, and failures to comply with, such
statutes, regulations, rules, ordinances, laws or licenses, would
reasonably be expected to result in penalties, fines, claims or
other liabilities (including, without limitation, remediation
costs and expenses) to the Consolidated Companies in amounts in
excess of $4,500,000, either individually or in the aggregate
(including any such penalties, fines, claims, or liabilities
relating to the matters set forth on Schedule 7.08(a)), except as
set forth on Schedule 7.08(a) or in any notice furnished to the
Lenders pursuant to Section 8.07(j) at or prior to the respective
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times the representations and warranties set forth in this
Section 7.08(a) are made or deemed to be made hereunder.
(b) Except as set forth on Schedule 7.08(b) or in
any notice furnished to the Lenders pursuant to Section 8.07(j)
at or prior to the respective times the representations and
warranties set forth in this Section 7.08(b) are made or deemed
to be made hereunder, none of the Consolidated Companies has
received during the period from January 1, 1983 through the date
of this Agreement, any notice of violation, or notice of any
action, either judicial or administrative, from any governmental
authority (whether United States or foreign) relating to the
actual or alleged violation of any Environmental Law, including,
without limitation, any notice of any actual or alleged spill,
leak, or other release of any Hazardous Substance, waste or
hazardous waste by any Consolidated Company or its employees or
agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company, where any such
violation, spill, leak, release or contamination would reasonably
be expected to result in penalties, fines, claims or other
liabilities (including, without limitation, remediation costs and
expenses) to the Consolidated Companies in amounts in excess of
$4,500,000, either individually or in the aggregate (including
any such penalties, fines, claims or liabilities relating to the
matters set forth on Schedule 7.08(a)); provided, however, that
with respect to the period from January 1, 1983, through
December 31, 1986, such representation and warranty shall be
deemed to be made only with respect to notices known to and
disclosed by the Consolidated Companies in this Agreement and any
additional notices of which any Credit Party has actual knowledge
as of the date of this Agreement or hereafter.
(c) The Consolidated Companies have obtained all
necessary governmental permits, licenses and approvals which are
material to the operations conducted on their respective
properties, including without limitation, all required material
permits, licenses and approvals for (i) the emission of air
pollutants or contaminates, (ii) the treatment or pretreatment
and discharge of waste water or storm water, (iii) the treatment,
storage, disposal or generation of hazardous wastes, (iv) the
withdrawal and usage of ground water or surface water, and
(v) the disposal of solid wastes.
Section 7.09. Insurance. The Consolidated
Companies currently maintain insurance with respect to their
respective properties and businesses, with financially sound and
reputable insurers, having coverages against losses or damages of
the kinds customarily insured against by reputable companies in
the same or similar businesses, such insurance being in amounts
no less than those amounts which are customary for such companies
under similar circumstances. The Consolidated Companies have
paid all material amounts of insurance premiums now due and owing
with respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect.
Section 7.10. No Default. None of the
Consolidated Companies is in default under or with respect to any
Contractual Obligation in any respect which has had or is
reasonably expected to have a Materially Adverse Effect.
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Section 7.11. No Burdensome Restrictions. Except
as set forth on Schedule 7.11 or in any notice furnished to the
Lenders pursuant to Section 8.07(p) at or prior to the respective
times the representations and warranties set forth in this Sec-
tion 7.11 are made or deemed to be made hereunder, none of the
Consolidated Companies is a party to or bound by any Contractual
Obligation or Requirement of Law which has had or would
reasonably be expected to have a Materially Adverse Effect.
Section 7.12. Taxes. Except as set forth on
Schedule 7.12, each of the Consolidated Companies have filed or
caused to be filed all declarations, reports and tax returns
which are required to have been filed, and has paid all taxes,
custom duties, levies, charges and similar contributions ("taxes"
in this Section 7.12) shown to be due and payable on said returns
or on any assessments made against it or its properties, and all
other taxes, fees or other charges imposed on it or any of its
properties by any governmental authority (other than those the
amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided in its
books); and no tax liens have been filed and, to the knowledge of
Interface or any other Borrower, no claims are being asserted
with respect to any such taxes, fees or other charges; excluding,
however, for purposes of the foregoing portions of this Section,
tax returns not filed or taxes not paid where the aggregate
amount of taxes involved does not exceed $2,500,000 in the
aggregate and the failure to file such returns or pay such taxes
has resulted from the Consolidated Companies being without
knowledge that the respective tax authorities are claiming such
taxes to be due.
Section 7.13. Subsidiaries. Except as disclosed
on Schedule 7.01, on the date of this Agreement, Interface has no
Subsidiaries and neither Interface nor any Subsidiary is a joint
venture partner or general partner in any partnership. After the
date of this Agreement, except as disclosed on Schedule 7.13 or
in any notice furnished pursuant to Section 8.07(q) at or prior
to the respective times the representations and warranties set
forth in this Section 7.13 are made or deemed to be made
hereunder, Interface has no Material Subsidiaries.
Section 7.14. Financial Statements. The
Borrowers have furnished to the Co-Agents and the Lenders (i) the
audited consolidated balance sheet of the Consolidated Companies
as at December 29, 1996 and the related consolidated statements
of income, shareholders' equity and cash flows for the 52-week
period then ended, including in each case the related schedules
and notes, and (ii) the unaudited balance sheet of the
Consolidated Companies as at the end of the first fiscal quarter
of 1997, and the related unaudited consolidated statements of in-
come, shareholders' equity, and cash flows for the period then
ended, setting forth in each case in comparative form the figures
for the previous fiscal year and first fiscal quarter, as the
case may be. The foregoing financial statements fairly present
in all material respects the consolidated financial condition of
such Consolidated Companies as at the dates thereof and results
of operations for such periods in conformity with GAAP
consistently applied. Such Consolidated Companies taken as a
whole do not have any material contingent obligations, contingent
liabilities, or material liabilities for known taxes, long-term
leases or unusual forward or long-term commitments not reflected
in the foregoing financial statements or the notes thereto.
Since December 29, 1996, there have been no changes with respect
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to such Consolidated Companies which has had or would reasonably
be expected to have a Materially Adverse Effect.
Section 7.15. ERISA. Except as disclosed on
Schedule 7.15 or in any notice furnished to the Lenders pursuant
to Section 8.07(k) at or prior to the respective times the
representations and warranties set forth in this Section 7.15 are
made or deemed to be made hereunder:
(a)(1) Identification of Plans. (A) None of the
Consolidated Companies nor any of their respective ERISA
Affiliates maintains or contributes to, or has during the past
two years maintained or contributed to, any Plan that is subject
to Title IV of ERISA, and (B) none of the Consolidated Companies
maintains or contributes to any Foreign Plan;
(2) Compliance. Each Plan and each Foreign Plan
maintained by the Consolidated Companies have at all times been
maintained, by their terms and in operation, in compliance with
all applicable laws, and the Consolidated Companies are subject
to no tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof, including
without limitation, any tax or penalty under Title I or Title IV
of ERISA or under Chapter 43 of the Tax Code, or any tax or
penalty resulting from a loss of deduction under Sections 162,
404, or 419 of the Tax Code, where the failure to comply with
such laws, and such taxes and penalties, together with all other
liabilities referred to in this Section 7.15 (taken as a whole),
would in the aggregate have a Materially Adverse Effect;
(3) Liabilities. The Consolidated Companies are
subject to no liabilities (including withdrawal liabilities) with
respect to any Plans or Foreign Plans of such Consolidated Compa-
nies or any of their ERISA Affiliates, including without limita-
tion, any liabilities arising from Titles I or IV of ERISA, other
than obligations to fund benefits under an ongoing Plan and to
pay current contributions, expenses and premiums with respect to
such Plans or Foreign Plans, where such liabilities, together
with all other liabilities referred to in this Section 7.15
(taken as a whole), would in the aggregate have a Materially
Adverse Effect;
(4) Funding. The Consolidated Companies and,
with respect to any Plan which is subject to Title IV of ERISA,
each of their respective ERISA Affiliates, have made full and
timely payment of all amounts (A) required to be contributed
under the terms of each Plan and applicable law, and (B) required
to be paid as expenses (including PBGC or other premiums) of each
Plan, where the failure to pay such amounts (when taken as a
whole, including any penalties attributable to such amounts)
would have a Materially Adverse Effect. No Plan subject to Title
IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if such
Plan terminated on any date on which this representation and
warranty is deemed made, in any amount which, together with all
other liabilities referred to in this Section 7.15 (taken as a
whole), would have a Materially Adverse Effect if such amount
were then due and payable. The Consolidated Companies are
subject to no liabilities with respect to post-retirement medical
benefits in any amounts which, together with all other
liabilities referred to in this Section 7.15 (taken as a whole),
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would have a Materially Adverse Effect if such amounts were then
due and payable.
(b) With respect to any Foreign Plan, reasonable
reserves have been established in accordance with prudent
business practice or where required by ordinary accounting
practices in the jurisdiction where the Foreign Subsidiary
maintains its principal place of business or in which the Foreign
Plan is maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with respect
to such Foreign Plans, together with all other liabilities
referred to in this Section 7.15 (taken as a whole), would not
have a Materially Adverse Effect.
Section 7.16. Patents, Trademarks, Licenses, Etc.
Except as set forth on Schedule 7.16 or in any notice furnished
to the Lenders pursuant to Section 8.07(p) at or prior to the
respective times the representations and warranties set forth in
this Section 7.16 are made or deemed to be made hereunder,
(i) the Consolidated Companies have obtained and hold in full
force and effect all material patents, trademarks, service marks,
trade names, copyrights, licenses and other such rights, free
from burdensome restrictions, which are necessary for the
operation of their respective businesses as presently conducted,
and (ii) to the best of the Borrowers' knowledge, no product,
process, method, service or other item presently sold by or
employed by any Consolidated Company in connection with such
business infringes any patents, trademark, service mark, trade
name, copyright, license or other right owned by any other person
and there is not presently pending, or to the knowledge of the
Borrowers, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right
to sell or use any such product, process, method, substance or
other item where the result of such failure to obtain and hold
such benefits or such infringement would have a Materially
Adverse Effect.
Section 7.17. Ownership of Property. Except as
set forth on Schedule 7.17, (i) each Consolidated Company that is
not a Foreign Subsidiary has good and marketable fee simple title
to or a valid leasehold interest in all of its real property and
good title to, or a valid leasehold interest in, all of its other
property, and (ii) each Foreign Subsidiary owns or has a valid
leasehold interest in all of its real property and owns or has a
valid leasehold interest in, all of its other properties, in the
case of clauses (i) and (ii) as such properties are reflected in
the consolidated balance sheet of the Consolidated Companies as
of December 29, 1996, referred to in Section 7.14, other than
properties disposed of in the ordinary course of business since
such date or as otherwise permitted by the terms of this
Agreement, subject to no Lien or title defect of any kind, except
Liens permitted hereby and title defects not constituting
material impairments in the intended use for such properties.
The Consolidated Companies enjoy peaceful and undisturbed
possession under all of their respective leases.
Section 7.18. Indebtedness. Except as set forth
on Schedules 7.18 and 9.01, none of the Consolidated Companies is
an obligor in respect of any Indebtedness for borrowed money, or
any commitment to create or incur any Indebtedness for borrowed
money, in an amount not less than $1,000,000 in any single case,
and such Indebtedness and commitments for amounts less than
$1,000,000 do not exceed $5,000,000 in the aggregate for all such
Indebtedness and commitments of the Consolidated Companies.
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Section 7.19. Financial Condition. On the
Closing Date and after giving effect to the transactions
contemplated by this Agreement, the Letter of Credit Agreement,
and the other Credit Documents, including without limitation, the
use of the proceeds of the Term Loans, Multicurrency Revolving
Loans, and Domestic Revolving Loans as provided in Articles II,
III and IV (i) assets of each Credit Party at fair valuation and
based on their present fair saleable value (including, without
limitation, the fair and realistic value of (x) any contribution
or subrogation rights in respect of any Guaranty Agreement given
by such Credit Party, and (y) any Intercompany Loan owed to such
Credit Party) will exceed such Credit Party's debts, including
contingent liabilities (as such liabilities may be limited under
the express terms of any Guaranty Agreement of such Credit
Party), (ii) the remaining capital of such Credit Party will not
be unreasonably small to conduct the Credit Party's business, and
(iii) such Credit Party will not have incurred debts, or have
intended to incur debts, beyond the Credit Party's ability to pay
such debts as they mature. For purposes of this Section 7.19,
"debt" means any liability on a claim, and "claim" means (a) the
right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) the right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
Section 7.20. Intercompany Loans. The
Intercompany Loans and the Intercompany Loan Documents have been
duly authorized and approved by all necessary corporate and
shareholder action on the part of the parties thereto, and
constitute the legal, valid and binding obligations of the
parties thereto, enforceable against each of them in accordance
with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, and by
general principles of equity.
Section 7.21. Labor Matters. Except as set forth
in Schedule 7.21 or in any notice furnished to the Lenders
pursuant to Section 8.07(p) at or prior to the respective times
the representations and warranties set forth in this Section 7.21
are made or deemed to be made hereunder, the Consolidated
Companies have experienced no strikes, labor disputes, slow downs
or work stoppages due to labor disagreements which have had, or
would reasonably be expected to have, a Materially Adverse
Effect, and, to the best knowledge of the Borrowers, there are no
such strikes, disputes, slow downs or work stoppages threatened
against any Consolidated Company. The hours worked and payment
made to employees of the Consolidated Companies have not been in
violation in any material respect of the Fair Labor Standards Act
(in the case of Consolidated Companies that are not Foreign
Subsidiaries) or any other applicable law dealing with such
matters. All payments due from the Consolidated Companies, or
for which any claim may be made against the Consolidated
Companies, on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as
liabilities on the books of the Consolidated Companies where the
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failure to pay or accrue such liabilities would reasonably be
expected to have a Materially Adverse Effect.
Section 7.22. Payment or Dividend Restrictions.
Except as set forth in Section 9.12 or described on
Schedule 7.22, none of the Consolidated Companies is party to or
subject to any agreement or understanding restricting or limiting
the payment of any dividends or other distributions by any such
Consolidated Company.
Section 7.23. Disclosure. No representation or
warranty contained in this Agreement (including the Schedules at-
tached hereto) or in any other document furnished from time to
time pursuant to the terms of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make the statements
herein or therein not misleading as of the date made or deemed to
be made. Except as may be set forth herein (including the Sched-
ules attached hereto) or in any notice furnished to the Lenders
pursuant to Section 8.07 at or prior to the respective times the
representations and warranties set forth in this Section 7.23 are
made or deemed to be made hereunder, there is no fact known to
the Borrowers which has had, or is reasonably expected to have, a
Materially Adverse Effect.
ARTICLE VIII.
AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect
hereunder or any Note shall remain unpaid, Interface (whether or
not it is a Borrower hereunder) and each other Borrower will:
Section 8.01. Organizational Existence, Etc.
Preserve and maintain, and cause each of its Material
Subsidiaries to preserve and maintain, its corporate or other
organizational existence, its material rights, franchises, and
licenses, and its material patents and copyrights (for the
scheduled duration thereof), trademarks, trade names, and service
marks, necessary or desirable in the normal conduct of its
business, and its qualification to do business as a foreign
corporation or other organization in all jurisdictions where it
conducts business or other activities making such qualification
necessary, where the failure to be so qualified would reasonably
be expected to have a Materially Adverse Effect.
Section 8.02. Compliance with Laws, Etc. Comply,
and cause each of its Subsidiaries to comply with all
Requirements of Law (including, without limitation, the
Environmental Laws subject to the exception set forth in
Section 7.08(a) where the penalties, claims, fines, and other
liabilities resulting from noncompliance with such Environmental
Laws do not involve amounts in excess of $10,000,000 in the
aggregate) and Contractual Obligations applicable to or binding
on any of them where the failure to comply with such Requirements
of Law and Contractual Obligations would reasonably be expected
to have a Materially Adverse Effect.
Section 8.03. Payment of Taxes and Claims, Etc.
Pay, and cause each of its Subsidiaries to pay, (i) all taxes,
assessments and governmental charges imposed upon it or upon its
property, and (ii) all claims (including, without limitation,
claims for labor, materials, supplies or services) which might,
if unpaid, become a Lien upon its property, unless, in each case,
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the validity or amount thereof is being contested in good faith
by appropriate proceedings and adequate reserves are maintained
with respect thereto.
Section 8.04. Keeping of Books. Keep, and cause
each of its Subsidiaries to keep, proper books of record and
account, containing complete and accurate entries of all their
respective financial and business transactions which are required
to be maintained in order to prepare the consolidated financial
statements of Interface in conformity with GAAP.
Section 8.05. Visitation, Inspection, Etc.
Permit, and cause each of its Subsidiaries to permit, any
representative of any Co-Agent or Lender to visit and inspect any
of its property, to examine its books and records and to make
copies and take extracts therefrom, and to discuss its affairs,
finances and accounts with its officers, all at such reasonable
times and as often as such Co-Agent or Lender may reasonably
request after reasonable prior notice to Interface; provided,
however, that at any time following the occurrence and during the
continuance of a Default or an Event of Default, no prior notice
to Interface shall be required. To the extent that any Co-Agent
or Lender thereby obtains possession of non-public information
constituting trade secrets, technology or other similar
proprietary information identified to the Co-Agent or Lender in
writing by Interface as being subject to confidential treatment
under this Agreement, such party shall treat such information as
confidential. In any event, such Co-Agent or Lender may, subject
to Section 12.06(e), make disclosure to any assignee or
participant, or to any prospective assignee or participant, in
connection with an assignment or participation permitted thereby,
or as required or requested by any governmental agency or
representative thereof, or as required to defend any legal action
or to exercise any rights, remedies or powers available to the
Agents or Lender under the Credit Documents or as otherwise
required by law or pursuant to legal process; provided, that,
unless prohibited by applicable law or court order, such Co-Agent
or Lender shall notify Interface as promptly as practicable after
receipt thereof of any governmental request, subpoena or court
order (other than any such request, subpoena or court order in
connection with an examination of the financial condition of such
Co-Agent or Lender by any governmental agency) for disclosure of
any such non-public information; provided, however, that no delay
or failure to provide such notice shall give rise to any claim,
defense or right of offset against such Lender or Co-Agent
hereunder. The foregoing shall not prohibit disclosure of such
information to the extent it has become public information other
than through a disclosure by a Co-Agent or Lender not otherwise
permitted herein.
Section 8.06. Insurance; Maintenance of
Properties.
(a) Maintain or cause to be maintained with
financially sound and reputable insurers, insurance with respect
to its properties and business, and the properties and business
of its Subsidiaries, against loss or damage of the kinds
customarily insured against by reputable companies in the same or
similar businesses, such insurance to be of such types and in
such amounts as is customary for such companies under similar
circumstances; provided, however, that in any event Interface and
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each other Borrower shall use their best efforts to maintain, or
cause to be maintained, insurance in amounts and with coverages
not materially less favorable to any Consolidated Company as in
effect on the date of this Agreement, except where the costs of
maintaining such insurance would, in the judgment of both
Interface and the Co-Agents, be excessive.
(b) Cause, and cause each of the Consolidated
Companies to cause, all properties used or useful in the conduct
of its business to be maintained and kept in good condition,
repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs,
renewals, replacements, settlements and improvements thereof, all
as in the judgment of Interface may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent Interface from
discontinuing the operation or maintenance of any such properties
if such discontinuance is, in the judgment of Interface,
desirable in the conduct of its business or the business of any
Consolidated Company.
Section 8.07. Reporting Covenants. Furnish to
each Lender:
(a) Annual Financial Statements. As soon as
available and in any event within 120 days after
the end of each fiscal year of Interface, balance
sheets of the Consolidated Companies as at the end
of such year, presented on a consolidated and a
"line of business" basis, and the related
statements of income, shareholders' equity, and
cash flows of the Consolidated Companies for such
fiscal year, presented on a consolidated and a
"line of business" basis, setting forth in each
case in comparative form the figures for the
previous fiscal year, all in reasonable detail
and, except with respect to the financial
statements prepared on a "line of business" basis,
accompanied by a report thereon of BDO Seidman or
other independent public accountants of comparable
recognized national standing, which such report
shall be unqualified as to going concern and scope
of audit and shall state that such financial
statements present fairly in all material respects
the financial condition as at the end of such
fiscal year on a consolidated basis, and the
results of operations and statements of cash flows
of the Consolidated Companies for such fiscal year
in accordance with GAAP and that the examination
by such accountants in connection with such
consolidated financial statements has been made in
accordance with generally accepted auditing
standards;
(b) Quarterly Financial Statements. As soon
as available and in any event within 60 days after
the end of each fiscal quarter of Interface (other
than the fourth fiscal quarter), balance sheets of
the Consolidated Companies as at the end of such
quarter presented on a consolidated and a "line of
business" basis and the related statements of in-
come, shareholders' equity, and cash flows of the
Consolidated Companies for such fiscal quarter and
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for the portion of Interface's fiscal year ended
at the end of such quarter, presented on a
consolidated and a "line of business" basis
setting forth in each case in comparative form the
figures for the corresponding quarter and the
corresponding portion of Interface's previous
fiscal year, all in reasonable detail and
certified by the chief financial officer or
principal accounting officer of Interface that
such financial statements fairly present in all
material respects the financial condition of the
Consolidated Companies as at the end of such
fiscal quarter on a consolidated and "line of
business" basis, and the results of operations and
statements of cash flows of the Consolidated
Companies for such fiscal quarter and such portion
of Interface's fiscal year, in accordance with
GAAP consistently applied (subject to normal year-
end audit adjustments and the absence of certain
footnotes);
(c) No Default/Compliance Certificate.
Together with the financial statements required
pursuant to subsections (a) and (b) above, a
certificate of the president, chief financial
officer or principal accounting officer of
Interface (i) to the effect that, based upon a
review of the activities of the Consolidated
Companies and such financial statements during the
period covered thereby, there exists no Event of
Default and no Default under this Agreement, or if
there exists an Event of Default or a Default
hereunder, specifying the nature thereof and the
proposed response thereto, and (ii) demonstrating
in reasonable detail compliance as at the end of
such fiscal year or such fiscal quarter with Sec-
tion 8.09 and Sections 9.01 through 9.05;
(d) Excess Cash Flow Certificate. Together
with the financial statements required pursuant to
subsection (a) above, a certificate of the
president, chief financial officer or principal
accounting officer of Interface setting forth the
calculation of Excess Cash Flow in reasonable
detail for the fiscal year covered by such
financial statements;
(e) Auditor's No Default Certificate.
Together with the financial statements required
pursuant to subsection (a) above, a certificate of
the accountants who prepared the report referred
to therein, to the effect that, based upon their
audit, there exists no Default or Event of Default
under this Agreement, or if there exists a Default
or Event of Default hereunder, specifying the
nature thereof;
(f) Annual Budget. Within 120 days after
the beginning of each fiscal year, an annual
financial plan and forecasted balance sheets and
statements of income, shareholders' equity, and
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cash flows for such fiscal year for the Consoli-
dated Companies presented on a consolidated and
"line of business" basis;
(g) Notice of Default. Promptly after any
officer of Interface or any other Borrower has
notice or knowledge of the occurrence of an Event
of Default or a Default, a certificate of the
chief financial officer or principal accounting
officer of Interface specifying the nature thereof
and the proposed response thereto;
(h) Asset Sales. Together with the
financial statements required pursuant to
subsection (a) above, a certificate of the chief
financial officer or principal accounting officer
of Interface reporting all Asset Sales effected
by the Consolidated Companies during the fiscal
year covered by such financial statements which
involved Asset Values in excess of $1,000,000 in
any single transaction or related series of
transactions, including the Asset Value of such
assets and the amounts received by the
Consolidated Companies with respect to such sales,
and such other information regarding such
transactions as any Co-Agent or Lender may rea-
sonably request;
(i) Litigation. Promptly after (i) the
occurrence thereof, notice of the institution of
or any material adverse development in any
material action, suit or proceeding or any
governmental investigation or any arbitration,
before any court or arbitrator or any governmental
or administrative body, agency or official,
against any Consolidated Company, or any material
property of any thereof, or (ii) actual knowledge
thereof, notice of the threat of any such action,
suit, proceeding, investigation or arbitration;
(j) Environmental Notices. Promptly after
receipt thereof, notice of any actual or alleged
violation, or notice of any action, claim or
request for information, either judicial or
administrative, from any governmental authority
relating to any actual or alleged claim, notice of
potential responsibility under or violation of any
Environmental Law, or any actual or alleged spill,
leak, disposal or other release of any waste,
petroleum product, or hazardous waste or Hazardous
Substance by any Consolidated Company which could
result in penalties, fines, claims or other
liabilities to any Consolidated Company in amounts
in excess of $1,000,000;
(k) ERISA. (A)(i) Promptly after the
occurrence thereof with respect to any Plan of any
Consolidated Company or any ERISA Affiliate
thereof, or any trust established thereunder,
notice of (A) a "reportable event" described in
Section 4043 of ERISA and the regulations issued
from time to time thereunder (other than a
"reportable event" not subject to the provisions
for 30-day notice to the PBGC under such
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regulations), or (B) any other event which could
subject any Consolidated Company to any tax,
penalty or liability under Title I or Title IV of
ERISA or Chapter 43 of the Tax Code, or any tax or
penalty resulting from a loss of deduction under
Sections 162, 404 or 419 of the Tax Code, or any
tax, penalty or liability under any Requirement of
Law applicable to any Foreign Plan, where any such
taxes, penalties or liabilities exceed or could
exceed $1,000,000 in the aggregate;
(ii) Promptly after such notice must be
provided to the PBGC, or to a Plan participant,
beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303,
307, 4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or
under Section 401(a)(29) or 412 of the Tax Code
with respect to any Plan of any Consolidated
Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice
received by any Consolidated Company or any ERISA
Affiliate thereof concerning the intent of the
PBGC or any other governmental authority to
terminate a Plan of such Company or ERISA Af-
filiate thereof which is subject to Title IV of
ERISA, to impose any liability on such Company or
ERISA Affiliate under Title IV of ERISA or Chapter
43 of the Tax Code;
(iv) Promptly upon the filing thereof with
the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form
5500 or annual report for each Plan of any
Consolidated Company or ERISA Affiliate thereof
which is subject to Title IV of ERISA;
(v) Upon the request of the Co-Agents,
(A) true and complete copies of any and all
documents, government reports and IRS
determination or opinion letters or rulings for
any Plan of any Consolidated Company from the IRS,
PBGC or DOL, (B) any reports filed with the IRS,
PBGC or DOL with respect to a Plan of the
Consolidated Companies or any ERISA Affiliate
thereof, or (C) a current statement of withdrawal
liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate
thereof;
(B) Promptly upon any Consolidated Company
becoming aware thereof, notice that (i) any
material contributions to any Foreign Plan have
not been made by the required due date for such
contribution and such default cannot immediately
be remedied, (ii) any Foreign Plan is not funded
to the extent required by the law of the
jurisdiction whose law governs such Foreign Plan
based on the actuarial assumptions reasonably used
at any time, or (iii) a material change is
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anticipated to any Foreign Plan that may have a
Materially Adverse Effect.
(l) Liens. Promptly upon any Consolidated
Company becoming aware thereof, notice of the
filing of any federal statutory Lien, tax or other
state or local government Lien or any other Lien
affecting their respective properties, other than
those Liens expressly permitted by Section 9.02;
(m) Domestication of Subsidiaries. Not less
than 30 days prior thereto, notice of any intended
domestication of any Foreign Subsidiary as a
United States corporation, whether by merger,
stock transfer or otherwise;
(n) Public Filings, Etc. Promptly upon the
filing thereof or otherwise becoming available,
copies of all financial statements, annual,
quarterly and special reports, proxy statements
and notices sent or made available generally by
Interface to its public security holders, of all
regular and periodic reports and all registration
statements and prospectuses, if any, filed by any
of them with any securities exchange, and of all
press releases and other statements made available
generally to the public containing material devel-
opments in the business or financial condition of
Interface and the other Consolidated Companies;
(o) Accountants' Reports. Promptly upon
receipt thereof, copies of all financial
statements of, and all reports submitted by,
independent public accountants to Interface in
connection with each annual, interim, or special
audit of Interface's financial statements,
including without limitation, the comment letter
submitted by such accountants to management in
connection with their annual audit;
(p) Burdensome Restrictions, Etc. Promptly
upon the existence or occurrence thereof, notice
of the existence or occurrence of (i) any
Contractual Obligation or Requirement of Law
described in Section 7.11, (ii) failure of any
Consolidated Company to hold in full force and
effect those trademarks, service marks, patents,
trade names, copyrights, licenses and similar
rights necessary in the normal conduct of its
business, the loss or absence of which could have
a Materially Adverse Effect, and (iii) any strike,
labor dispute, slow down or work stoppage as
described in Section 7.21;
(q) New Material Subsidiaries. Within
30 days after the formation or acquisition of any
Material Subsidiary, or any other event resulting
in the creation of a new Material Subsidiary,
notice of the formation or acquisition of such
Material Subsidiary or such occurrence, including
a description of the assets of such entity, the
activities in which it will be engaged, and such
other information as the Co-Agents may request;
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(r) Intercompany Asset Transfers. Promptly
upon the occurrence thereof, notice of the
transfer of any assets from any Credit Party to
any other Consolidated Company that is not a
Credit Party (in any transaction or series of
related transactions), excluding (i) sales or
other transfers of assets in the ordinary course
of business, where the Asset Value of such assets
is greater than $5,000,000, and (ii) sales of
accounts receivables or undivided ownership
interests therein pursuant to the terms of the
Accounts Receivable Facilities.
(s) Asset Sales. At any time that the
aggregate amount of Asset Sales made by the
Consolidated Companies after October 2, 1994
exceeds $10,000,000 (based on the Asset Values),
prompt notice of any additional Asset Sale or
related series of Asset Sales involving Asset
Values of $1,000,000 or more; and
(t) Other Information. With reasonable
promptness, such other information about the
Consolidated Companies as any Co-Agent or Lender
may reasonably request from time to time.
Section 8.08. Currency Contract.
The Borrowers shall maintain in full force and
effect Currency Contracts and Interest Rate Contracts pursuant to
the FNBC Currency Contract, subject to no changes of material
terms or conditions except as may be approved in writing by the
Co-Agents, and/or additional Currency Contracts and Interest Rate
Contracts pursuant to other interest rate and currency exchange
agreements, and in any event sufficient to protect the Borrowers
against fluctuations in interest and currency exchange rates with
respect to principal and interest payments on an aggregate no-
tional amount equal to $80,000,000 (or such lesser amount as
shall have been consented to in writing by the Co-Agents, such
consent not to be unreasonably withheld so long as such lesser
amount is at least $40,000,000) for an initial average maturity
of five (5) years (or such lesser initial average maturity as
shall have been consented to in writing by the Co-Agents, such
consent not to be unreasonably withheld so long as such lesser
initial average maturity is at least three years).
Notwithstanding the foregoing, the Consolidated Companies shall
determine to their own satisfaction whether Currency Contracts
and Interest Rate Contracts to which they are respective parties
are sufficient to provide protection against fluctuations in
interest rates and currency exchange rates, and to meet their
respective needs and (notwithstanding any approval, or failure to
approve, by the Co-Agents) neither the Co-Agents nor any Lender
shall have any obligation or accountability with respect thereto
or any obligation to propose, quote or enter into any Interest
Rate Contract or Currency Contract.
Section 8.09. Financial Covenants.
(a) Working Capital. Maintain as of the last day
of each fiscal quarter Adjusted Working Capital of at least
$110,000,000.
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(b) Interest Coverage. Maintain as of the last
day of each fiscal quarter, calculated with respect to the
immediately preceding four fiscal quarters, an Interest Coverage
Ratio not less than 2.25 to 1.00.
(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:
Maximum Funded
Debt Coverage
Period Ratio
------ -------------
January 9, 1995 through
June 29, 1997 4.75:1.00
June 30, 1997 and thereafter 4.50:1.00
(d) Senior Funded Debt to Total Capitalization.
Maintain as of the last day of each fiscal quarter a maximum
ratio of Senior Funded Debt to Total Capitalization, expressed as
a percentage, of no more than 50%.
(e) Leverage Ratio. Maintain as of the last day
of each fiscal quarter a maximum Leverage Ratio of sixty-five
percent (65%).
(f) First Fiscal Quarter Calculations. Sched-
ule 8.09 sets forth the calculation of the financial covenant
amounts, ratios, and percentages required by paragraphs (a)
through (e) of this Section 8.09 calculated as of the end of the
first fiscal quarter of Interface's 1997 fiscal year.
Section 8.10. Notices Under Certain Other
Indebtedness. Immediately upon its receipt thereof, Interface
shall furnish the Co-Agents a copy of any notice received by it
or any other Consolidated Company from the holder(s) of
Indebtedness referred to in Section 9.01(b), (c), (e), (g), (i),
(j) or (k) (or from any trustee, agent, attorney, or other party
acting on behalf of such holder(s)) in an amount which, in the
aggregate, exceeds $500,000, where such notice states or claims
(i) the existence or occurrence of any default or event of
default with respect to such Indebtedness under the terms of any
indenture, loan or credit agreement, debenture, note, or other
document evidencing or governing such Indebtedness, or (ii) with
respect to any Interface Control Debt, the existence or
occurrence of any event or condition which requires or permits
such holder(s) to exercise rights under any Change in Control
Provision. Interface agrees to take such actions as may be
necessary to require the holder(s) of Interface Control Debt (or
any trustee or agent acting on their behalf) to furnish copies of
all such notices directly to the Co-Agents simultaneously with
the furnishing thereof to Interface, and that such requirement
may not be altered or rescinded without the prior written consent
of the Co-Agents.
Section 8.11. Additional Credit Parties and
Collateral. Promptly after (i) the formation or acquisition of
any Material Subsidiary not listed on Schedule 7.13, (ii) the
transfer of assets to any Consolidated Company if notice thereof
is required to be given pursuant to Section 8.07(r) and as a
result thereof the recipient of such assets becomes a Material
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Subsidiary, (iii) the domestication of any Foreign Subsidiary
that is a Material Subsidiary, or (iv) the occurrence of any
other event creating a new Material Subsidiary (other than
Interface SPC which shall not be deemed to be a Material
Subsidiary for the purposes of this Section 8.11), Interface
shall execute and deliver, and cause to be executed and delivered
(x) a Pledge Agreement (or, in the case of Interface Heuga
Singapore Pte Ltd. or Interface Heuga Hong Kong Ltd., amendments
or supplements to the existing Pledge Agreement with respect to
the shares of such Subsidiary, or a new Pledge Agreement with
respect to such shares, as the Co-Agents may require pursuant to
the advice of their counsel) with respect to all capital stock of
such Material Subsidiary if it is not a Foreign Subsidiary, or
66% of the capital stock of such Material Subsidiary if it is a
Foreign Subsidiary directly owned by Interface or a Subsidiary
that is not, and is not directly or indirectly controlled by, a
Foreign Subsidiary, and (y) a Guaranty Agreement from each such
Material Subsidiary that is not a Foreign Subsidiary, together
with related documents of the kind described in Section 6.01(c),
(d), (f), (g), (h), and (t), all in form and substance satisfac-
tory to the Co-Agents.
Section 8.12. Accounts Receivable Facility. The
Accounts Receivable Facilities shall provide to Interface and
those Subsidiaries that are parties to the Receivables Transfer
Agreements financing for accounts receivable of an aggregate
amount outstanding at any time not to exceed $100,000,000.
ARTICLE IX.
NEGATIVE COVENANTS
So long as any Commitment remains in effect
hereunder or any Note shall remain unpaid, neither Interface
(whether or not it is a Borrower hereunder) nor any other
Borrower will or will permit any Subsidiary to:
Section 9.01. Indebtedness. Create, incur,
assume or suffer to exist any Indebtedness, other than:
(a) Indebtedness under this Agreement and
the 1997 Term Loan Agreement;
(b) The Senior Subordinated Notes and other
Indebtedness outstanding on the Closing Date and
described on Schedule 9.01(b);
(c) purchase money Indebtedness to the
extent secured by a Lien permitted by
Section 9.02(b) or 9.02(f);
(d) unsecured current liabilities (other
than liabilities for borrowed money or liabilities
evidenced by promissory notes, bonds or similar
instruments) incurred in the ordinary course of
business and either (i) not more than 90 days past
due, or (ii) being disputed in good faith by
appropriate proceedings with reserves for such
disputed liability maintained in conformity with
GAAP;
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(e) Indebtedness incurred with respect to
(i) the Letters of Credit issued for the account
of any Consolidated Company pursuant to the Letter
of Credit Agreement, and (ii) unsecured letters of
credit issued for the account of any Consolidated
Subsidiary in the ordinary course of business in
aggregate outstanding stated amounts not to exceed
$5,000,000;
(f) Indebtedness (other than liabilities for
borrowed money or liabilities evidenced by
promissory notes, bonds or similar instruments)
permitted under Section 9.02(c) or (d) or
Section 9.06, or permitted under Section 9.03 in
connection with the purchase, lease or other
acquisition of property or assets where such
Indebtedness is to the seller of such property or
assets and represents a deferral of payment for
such property or assets for a period not to exceed
the lesser of (i) normal trade terms for such
property or asset, or (ii) 180 days (commencing
from the date of delivery or, if applicable, the
date of installation of such property or asset);
(g) Subordinated Debt (other than the Senior
Subordinated Notes) in an aggregate principal
amount not to exceed $50,000,000;
(h) the Intercompany Loans described on
Schedule 7.20 and any other loans between
Consolidated Companies provided that (i) each loan
or other extension of credit made by a Guarantor
to another Consolidated Company that is not a
Guarantor hereunder shall be made payable on
demand and shall not be subordinated to other
obligations of such Consolidated Company and all
such loans and extensions of credit shall not
exceed $35,000,000 in the aggregate at any one
time outstanding (excluding Intercompany Loans
listed on Schedule 7.20 and other Intercompany
Loans made for the purpose of and used reasonably
concurrently for acquisitions permitted by Sec-
tion 9.03) unless otherwise agreed in writing by
the Required Lenders, (ii) each loan or other
extension of credit made to a Guarantor by another
Consolidated Company that is not a Guarantor
hereunder shall be made on a subordinated basis
consistent with the subordinated Intercompany
Loans in existence on the date of this Agreement
and no portion of the principal amount thereof
shall be payable prior to the Term Loan Final
Maturity Date or Revolver/Multicurrency Maturity
Date (whichever is last to occur), and (iii) such
loans or other extensions of credit are otherwise
permitted pursuant to the limitations of Section
9.05(c);
(i) Indebtedness under the Interest Rate
Contract(s) and Currency Contract(s) required to
be maintained pursuant to Section 8.08, or other
Currency Contracts entered into in the ordinary
course of business consistent with past practices;
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(j) Unsecured lines of credit, revolving
credit, and overdraft credit facilities described
on Schedule 9.01(j), and each extension, renewal,
and replacement of such credit facilities for
principal amounts not in excess of the respective
principal amounts shown on Schedule 9.01(j), and
having maturities in each case not longer than two
(2) years with annual renewals thereafter;
(k) Indebtedness, if any, owing by Interface
or Interface SPC pursuant to the Accounts
Receivable Facilities and Indebtedness, if any,
owing by any other Consolidated Company party to
the Receivables Transfer Agreements with respect
thereto;
(l) Indebtedness in an aggregate principal
amount not to exceed $15,000,000 under the
Distributor Credit Facilities (including, without
limitation, Indebtedness arising from any Guaranty
by Interface or its Subsidiaries required to be
given in respect of a portion of the Distributor
Credit Facilities in connection with the
acquisition of ownership interests in any retail
distributor), together with any extensions or
renewals of such Distributor Credit Facilities to
the extent that such extensions or renewals do not
increase the respective principal amounts that may
be outstanding under such Distributor Credit
Facilities; and
(m) other Indebtedness not to exceed $15,000,000
at any one time outstanding.
Section 9.02. Liens. Create, incur, assume or
suffer to exist any Lien on any of its property now owned or
hereafter acquired to secure any Indebtedness other than:
(a) Liens existing on the date hereof
disclosed on Schedule 9.02;
(b) any Lien on any property securing
Indebtedness incurred or assumed for the purpose
of financing all or any part of the acquisition
cost of such property, provided that such Lien
does not extend to any other property, and
provided further that the aggregate amount of
Indebtedness secured by all such Liens at any time
does not exceed $10,000,000;
(c) Liens for taxes not yet due, and Liens
for taxes or Liens imposed by ERISA which are
being contested in good faith by appropriate
proceedings and with respect to which adequate
reserves are being maintained;
(d) statutory Liens of landlords and Liens
of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law created in the
ordinary course of business for amounts not yet
due or which are being contested in good faith by
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appropriate proceedings and with respect to which
adequate reserves are being maintained;
(e) Liens incurred or deposits made in the
ordinary course of business in connection with
workers' compensation, unemployment insurance and
other types of social security, or to secure the
performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds
and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(f) Liens (other than those permitted by
paragraphs (a) through (e) of this Section 9.02)
encumbering assets having an Asset Value not
greater than $2,000,000 in the aggregate;
(g) Liens (i) in favor of the Collateral
Agent securing the Obligations hereunder and the
"Obligations" as defined in the 1997 Term Loan
Agreement, and (ii) securing Indebtedness under
the Interest Rate Contract and Currency Contract
required to be maintained pursuant to Section 8.08
(which Liens may be pari passu with the Liens in
favor of the Co-Agents and Lenders securing the
Obligations hereunder and the "Obligations" as
defined in the 1997 Term Loan Agreement, provided
that the properties and assets subject to such
Liens, and the terms and conditions of all
agreements and instruments granting or relating to
such Liens, shall be subject to the prior written
approval of the Co-Agents);
(h) Liens on any property included in the
IRB Collateral as may be approved by the
Collateral Agent pursuant to the terms of the
Letter of Credit Agreement; and
(i) Liens, if any, that may be deemed to
have been granted by any Consolidated Company in
favor of SPARCC, the Bank Purchasers or their
respective agents, on accounts receivable and
related property of such Consolidated Companies as
a result of the sale and assignment thereof (or of
undivided ownership interests therein) to SPARCC,
the Bank Purchasers or their respective agents
pursuant to the Accounts Receivable Facilities.
Section 9.03. Mergers, Acquisitions, Sales, Etc.
Merge or consolidate with any other Person, or sell, lease, or
otherwise dispose of its accounts, property or other assets
(including capital stock of Subsidiaries), or purchase, lease or
otherwise acquire all or any substantial portion of the property
or assets (including capital stock) of any Person; provided,
however, that the foregoing restrictions shall not be applicable
to (i) sales of equipment or other personal property being
replaced by other equipment or other personal property purchased
as a Capital Expenditure item, (ii) other Asset Sales (but
excluding Asset Sales occurring as part of any sale and leaseback
transactions permitted by Section 9.06) where, on the date of
execution of a binding obligation to make such Asset Sale
(provided that if the Asset Sale is not consummated within six
(6) months of such execution, then on the date of consummation of
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such Asset Sale rather than on the date of execution of such
binding obligation), the Asset Value of Asset Sales occurring
after October 2, 1994, taking into account the Asset Value of the
proposed Asset Sale, would not exceed (A) during any fiscal
quarter where Interface's Leverage Ratio for the preceding fiscal
quarter is equal to or greater than 50%, $25,000,000 in the
aggregate, (B) during any fiscal quarter where Interface's
Leverage Ratio for the preceding fiscal quarter is less than 50%
but equal to or greater than 35%, $50,000,000 in the aggregate,
and (C) during any fiscal quarter where Interface's Leverage
Ratio for the preceding fiscal quarter is less than 35%, an
unlimited amount, and in any such case where the Net Proceeds of
any such Asset Sale are applied to the extent required by Sec-
tion 2.03, Section 3.04 and Section 4.04, (iii) sales of
inventory in the ordinary course of business, (iv) sales of
accounts receivable (or of undivided ownership interests therein)
pursuant to the Accounts Receivable Facilities as along as the
total "Investment" of the purchasers party to the Receivables
Backup Purchase Agreements and the Receivable Sale Agreements (as
such term is defined in each such agreement) shall not exceed
$100,000,000 in aggregate amount outstanding at any time, (v)
purchases or other acquisitions of all or any substantial portion
of the property or assets of any Person (including capital stock)
during any fiscal year, provided that such transactions (x) have
been approved in advance by a majority of the board of directors
of the seller, and (y) have been demonstrated to the satisfaction
of the Co-Agents, through the preparation and delivery by
Interface to the Lenders prior to the execution of a contractual
obligation to make such purchase, of pro forma financial
statements demonstrating the effect of such transaction (in such
detail and using such form of presentation of historical and
forecasted financial information as may be satisfactory to the
Co-Agents), not to adversely affect the continued compliance of
the Consolidated Companies with the terms of this Agreement,
(vi) Asset Sales occurring as part of any sale and leaseback
transactions permitted pursuant to Section 9.06, or (vii) The
1996 Reorganization Transactions; provided, however, that no
transaction pursuant to clauses (i), (ii), (v) or (vi) above
shall be permitted if any Default or Event of Default otherwise
exists at the time of such transaction or would otherwise exist
as a result of such transaction.
Section 9.04. Dividends, Etc. Interface shall
not declare or pay any dividend on its capital stock, or make any
payment to purchase, redeem, retire or acquire any of its
Subordinated Debt or capital stock or any option, warrant, or
other right to acquire such Subordinated Debt or capital stock,
other than:
(i) dividends payable solely in shares
of capital stock;
(ii) payments made by Interface to
repurchase any shares of Class A Common Stock
of Interface previously delivered as a
portion of the consideration paid in the
Prince Street Acquisition, as may be provided
in the Prince Street Acquisition Agreement;
and
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(iii) cash dividends declared and paid,
and all other such payments made, after
December 29, 1991 (but excluding any payments
made pursuant to clause (ii) above) in an ag-
gregate amount at any time not to exceed (x)
$10,000,000, plus (y) fifty percent (50%) of
Consolidated Net Income (or minus one hundred
percent (100%) of Consolidated Net Loss)
earned during Interface's 1992 fiscal year
and thereafter (such period to be treated as
one accounting period);
provided, however, no such payment may be made pursuant to clause
(ii) above, and no such dividend or other payment may be paid or
made pursuant to clause (iii) above, unless (x) the full amount
of the mandatory prepayment required by Section 2.03(b), Section
3.04 or Section 4.04 has been made, and (y) no Default or Event
of Default exists at the time of such declaration or payment, or
would exist as a result of such declaration or payment. Nothing
in this Section 9.04 shall prevent the conversion of the
Convertible Preferred Stock into the common stock of Interface.
Section 9.05. Investments, Loans, Etc. Make,
permit or hold any Investments in any Person, or otherwise
acquire or hold any Subsidiaries, other than:
(a) Investments in Subsidiaries that are
Guarantors under this Agreement and Investments by
Interface in Interface SPC in the form of the
Receivables Subordinated Notes;
(b) Investments made and simultaneously used
for the acquisition of the capital stock of any
Person, or all or any substantial portion of the
property or assets of any Person, in an
acquisition permitted pursuant to Section 9.03;
(c) Investments in Subsidiaries, other than
those Subsidiaries that are Guarantors under this
Agreement, made after October 2, 1994, in an
aggregate amount not to exceed $35,000,000 unless
otherwise consented to in writing by the Required
Lenders; provided, however, that no Investment may
be made at any time that a Default or Event of
Default has occurred and is continuing or would
exist as a result of such Investment;
(d) direct obligations of the United States
or any agency thereof, or obligations guaranteed
by the United States or any agency thereof, in
each case supported by the full faith and credit
of the United States and maturing within one year
from the date of creation thereof;
(e) commercial paper maturing within one
year from the date of creation thereof rated in
the highest grade by a nationally recognized
credit rating agency;
(f) time deposits maturing within one year
from the date of creation thereof with, including
certificates of deposit issued by, any office
located in the United States of any bank or trust
company which is organized under the laws of the
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United States or any state thereof and has
capital, surplus and undivided profits aggregating
at least $500,000,000, including without
limitation, any such deposits in Eurodollars
issued by a foreign branch of any such bank or
trust company;
(g) Investments made by Plans and Foreign
Plans; and
(h) Investments (other than those permitted
by paragraphs (a) through (g) above) in an
aggregate amount not to exceed an amount equal to
15% of Interface's Consolidated Net Worth.
Section 9.06. Sale and Leaseback Transactions.
Sell or transfer any property, real or personal, whether now
owned or hereafter acquired, and thereafter rent or lease such
property or other property which any Consolidated Company intends
to use for substantially the same purpose or purposes as the
property being sold or transferred, except for such transactions
occurring after the date of this Agreement (i) with respect to
properties first acquired by any of the Consolidated Companies
after the date of this Agreement with the intent at the time of
such acquisition that such properties be the subjects of such
transactions, and such transactions are actually consummated
within 60 days after the initial acquisition of such properties,
so long as the Asset Values of such properties do not exceed
$25,000,000 in the aggregate, and (ii) with respect to all other
properties in all such transactions, so long as the Asset Values
of such other properties do not exceed $5,000,000 in the
aggregate.
Section 9.07. Transactions with Affiliates.
(a) Enter into any material transaction or series
of related transactions which in the aggregate would be material,
whether or not in the ordinary course of business, with any Af-
filiate of any Consolidated Company (but excluding any Affiliate
which is also a Consolidated Company), other than on terms and
conditions substantially as favorable to such Consolidated
Company as would be obtained by such Consolidated Company at the
time in a comparable arm's-length transaction with a Person other
than an Affiliate.
(b) Convey or transfer to any other Person
(including any other Consolidated Company) any real property,
buildings, or fixtures used in the manufacturing or production
operations of any Consolidated Company, or convey or transfer to
any other Consolidated Company any other assets (excluding
conveyances or transfers in the ordinary course of business) if
at the time of such conveyance or transfer any Default or Event
of Default exists or would exist as a result of such conveyance
or transfer.
Section 9.08. Optional Prepayments. Directly or
indirectly, prepay, purchase, redeem, retire, defease or
otherwise acquire, or make any optional payment on account of any
principal of, interest on, or premium payable in connection with
the optional prepayment, redemption or retirement of, any of its
Indebtedness, or give a notice of redemption with respect to any
such Indebtedness, or make any payment in violation of the
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subordination provisions of any Subordinated Debt, except with
respect to (i) the Obligations under this Agreement and the
Notes, and Indebtedness arising under the 1997 Term Loan
Agreement, (ii) redemptions, purchases or other acquisition of
the Subordinated Debentures as previously permitted by this
Agreement, (iii) prepayments of Indebtedness outstanding pursuant
to revolving credit, overdraft and line of credit facilities
permitted pursuant to Section 9.01, (iv) permitted prepayments of
Indebtedness incurred in connection with industrial revenue bonds
upon the occurrence of a determination of an event of taxability
entitling the holder(s) thereof to receive a higher rate of
interest, (v) Intercompany Loans made or outstanding pursuant to
Section 9.01(h)(i) where demand for payment has been made in
accordance with Section 9.13, and (vi) Intercompany Loans made or
outstanding pursuant to Section 9.01(h)(ii) upon the prior
written consent of the Co-Agents.
Section 9.09. Changes in Business. Enter into
any business which is substantially different from that presently
conducted by the Consolidated Companies taken as a whole, except
where the aggregate Investment made, and other funds expended or
committed, with respect to such business does not exceed
$7,500,000.
Section 9.10. ERISA. Take or fail to take any
action with respect to any Plan or Foreign Plan of any
Consolidated Company or, with respect to its ERISA Affiliates,
any Plans which are subject to Title IV of ERISA or to
continuation health care requirements for group health plans
under the Tax Code, including without limitation (i) establishing
any such Plan, (ii) amending any such Plan (except where required
to comply with applicable law), (iii) terminating or withdrawing
from any such Plan, or (iv) incurring an amount of unfunded
benefit liabilities, as defined in Section 4001(a)(18) of ERISA,
or any withdrawal liability under Title IV of ERISA with respect
to any such Plan, or any unfunded liabilities under any Foreign
Plan, without first obtaining the written approval of the
Required Lenders, where such actions or failures could result in
a Material Adverse Effect.
Section 9.11. Additional Negative Pledges.
Create or otherwise cause or suffer to exist or become effective,
directly or indirectly, any prohibition or restriction on the
creation or existence of any Lien upon any asset of any
Consolidated Company, other than pursuant to (i) Section 9.02,
(ii) the terms of any agreement, instrument or other document
pursuant to which any Indebtedness permitted by Section 9.02(b)
or 9.02(g) is incurred by any Consolidated Company, so long as
such prohibition or restriction applies only to the property or
asset being financed by such Indebtedness, (iii) any requirement
of applicable law or any regulatory authority having jurisdiction
over any of the Consolidated Companies; and (iv) the terms of the
Accounts Receivable Facilities with respect to the accounts
receivable and related property transferred thereunder and the
stock and other assets of Interface SPC.
Section 9.12. Limitation on Payment Restrictions
Affecting Consolidated Companies. Create or otherwise cause or
suffer to exist or become effective, any consensual encumbrance
or restriction on the ability of any Consolidated Company to
(i) pay dividends or make any other distributions on such
Consolidated Company's stock, other than the restrictions on
payment of dividends on Interface's common stock imposed in
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connection with the Convertible Preferred Stock, or (ii) pay any
indebtedness owed to Interface or any other Consolidated Company,
or (iii) transfer any of its property or assets to Interface or
any other Consolidated Company, except any consensual encumbrance
or restriction existing under the Credit Documents or the 1997
Term Loan Agreement. Notwithstanding the foregoing, nothing in
this Section 9.12 shall be deemed to prohibit restrictions on
dividends and distributions payable by Interface SPC, set forth
in, or required by, the terms of any document executed in
connection with the Accounts Receivable Facilities.
Section 9.13. Actions Under Certain Documents.
Without the prior written consent of the Co-Agents (which consent
shall not be unreasonably withheld), modify, amend, cancel or
rescind the Intercompany Loans or Intercompany Loan Documents, or
Subordinated Debt or any agreements or documents evidencing or
governing Subordinated Debt (except that a loan between
Consolidated Companies as permitted by Section 9.01(h) may be
modified or amended so long as it otherwise satisfies the
requirements of clause (ii) of Section 9.01(h)), or make demand
of payment or accept payment on any Intercompany Loans permitted
by Section 9.01(h)(ii), except that current interest accrued
thereon as of the date of this Agreement and all interest
subsequently accruing thereon (whether or not paid currently) may
be paid unless an Event of Default has occurred and is
continuing. In addition to the foregoing, without the prior
consent of the Co-Agents, the Consolidated Companies shall not
enter into any amendment or modification of the documents
executed in connection with the Accounts Receivable Facilities
which changes the definition of "Investment" or "Event of
Termination" used therein or any other material provision
thereof.
Section 9.14. Designated Senior Indebtedness.
Without the prior written consent of the Co-Agents, cause any
Indebtedness of Interface or any of its Subsidiaries, other than
Indebtedness owing under the 1997 Term Loan Agreement, to become
"Designated Senior Indebtedness" as provided in the Senior
Subordinated Notes Indenture.
ARTICLE X.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of
any of the following specified events (each an "Event of
Default"):
Section 10.01. Payments. Any Borrower shall fail
to make promptly when due (including, without limitation, by
mandatory prepayment) any principal payment with respect to the
Loans, or any Borrower shall fail to make within five (5) days
after the due date thereof any payment of interest, fee or other
amount payable hereunder;
Section 10.02. Covenants Without Notice.
Interface or any Borrower shall fail to observe or perform any
covenant or agreement contained in Sections 8.07(g), 8.09, 8.12,
9.01 through 9.06, 9.08, 9.09, and 9.11 through 9.14;
Section 10.03. Other Covenants. Interface or any
Borrower shall fail to observe or perform any covenant or
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agreement contained in this Agreement, other than those referred
to in Sections 10.01 and 10.02, and, if capable of being
remedied, such failure shall remain unremedied for 25 days after
the earlier of (i) Interface's or any Borrower's obtaining
knowledge thereof, or (ii) written notice thereof shall have been
given to Interface by any Co-Agent or Lender;
Section 10.04. Representations. Any
representation or warranty made or deemed to be made by
Interface, any other Borrower or any other Credit Party or by any
of its officers under this Agreement or any other Credit Document
(including the Schedules attached thereto), or any certificate or
other document submitted to the Agents or the Lenders by any such
Person pursuant to the terms of this Agreement or any other
Credit Document, shall be incorrect in any material respect when
made or deemed to be made or submitted;
Section 10.05. Non-Payments of Other
Indebtedness. Any Consolidated Company shall fail to make when
due (whether at stated maturity, by acceleration, on demand or
otherwise, and after giving effect to any applicable grace
period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $2,500,000 in
the aggregate;
Section 10.06. Defaults Under Other Agreements.
Any Consolidated Company shall fail to observe or perform within
any applicable grace period any covenants or agreements contained
in any agreements or instruments relating to any of its
Indebtedness exceeding $2,500,000 in the aggregate, or any other
event shall occur if the effect of such failure or other event is
to accelerate, or to permit the holder of such Indebtedness or
any other Person to accelerate, the maturity of such
Indebtedness; or any such Indebtedness shall be required to be
prepaid (other than by a regularly scheduled required prepayment)
in whole or in part prior to its stated maturity;
Section 10.07. Bankruptcy. Interface or any
other Material Company shall commence a voluntary case concerning
itself under the Bankruptcy Code or applicable foreign bankruptcy
laws; or an involuntary case for bankruptcy is commenced against
any Material Company and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement
of the case; or a custodian (as defined in the Bankruptcy Code)
or similar official under applicable foreign bankruptcy laws is
appointed for, or takes charge of, all or any substantial part of
the property of any Material Company; or any Material Company
commences proceedings of its own bankruptcy or to be granted a
suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction, whether now or hereafter in effect, relating to
any Material Company or there is commenced against any Material
Company any such proceeding which remains undismissed for a
period of 60 days; or any Material Company is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Material
Company suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Material
Company makes a general assignment for the benefit of creditors;
or any Material Company shall fail to pay, or shall state that it
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is unable to pay, or shall be unable to pay, its debts generally
as they become due; or any Material Company shall call a meeting
of its creditors with a view to arranging a composition or
adjustment of its debts; or any Material Company shall by any act
or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action is
taken by any Material Company for the purpose of effecting any of
the foregoing;
Section 10.08. ERISA. A Plan or Foreign Plan of
a Consolidated Company or a Plan subject to Title IV of ERISA of
any of its ERISA Affiliates
(i) shall fail to be funded in accordance
with the minimum funding standard required by
applicable law, the terms of such Plan or Foreign
Plan, Section 412 of the Tax Code or Section 302
of ERISA for any plan year or a waiver of such
standard is sought or granted with respect to such
Plan or Foreign Plan under applicable law, the
terms of such Plan or Foreign Plan or Section 412
of the Tax Code or Section 303 of ERISA; or
(ii)is being, or has been, terminated or the subject
of termination proceedings under applicable law or the terms of such Plan or
Foreign Plan; or
(iii) shall require a Consolidated Company to
provide security under applicable law, the terms of such Plan or
Foreign Plan, Section 401 or 412 of the Tax Code or Section 306
or 307 of ERISA; or
(iv)results in a liability to a Consolidated Company under
applicable law, the terms of such Plan or Foreign Plan, or Title IV of
ERISA;
and there shall result from any such failure, waiver,
termination or other event a liability to the PBGC (or any
similar Person with respect to any Foreign Plan) or a Plan that
would have a Materially Adverse Effect.
Section 10.09. Money Judgment. A judgment or
order for the payment of money in excess of $2,500,000 or
otherwise having a Materially Adverse Effect shall be rendered
against Interface or any other Material Company and such judgment
or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of 30 days during which
execution shall not be effectively stayed or deferred (whether by
action of a court, by agreement or otherwise);
Section 10.10. Ownership of Credit Parties. If
any Borrower (other than Interface) shall at any time fail to be
a wholly owned Subsidiary of Interface, either directly or indi-
rectly through another wholly owned Subsidiary of Interface, ex-
cept where all outstanding Loans made to such Borrower have been
paid in full and the Lenders shall have no further obligation to
extend additional credit to such Borrower;
Section 10.11. Change in Control of Interface.
(i) Any Change in Control shall occur or exist, or (ii) any event
or condition shall occur or exist which, pursuant to the terms of
any Change in Control Provision, requires or permits the
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holder(s) of Interface Control Debt to require that such
Interface Control Debt be redeemed, repurchased, defeased,
prepaid or repaid, in whole or in part, or the maturity of such
Interface Control Debt to be accelerated in any respect;
provided, however, that no Event of Default hereunder shall be
deemed to exist upon the occurrence of any event or condition
described in the foregoing clauses (i) or (ii) until thirty
(30) days after the first occurrence or existence of such event
or condition;
Section 10.12. Default Under Other Credit
Documents. There shall exist or occur any "Event of Default" as
provided under the terms of any other Credit Document (excluding
the IRB Collateral Documents), or any Credit Document (including
the IRB Collateral Documents) ceases to be in full force and
effect or the validity or enforceability thereof is disaffirmed
by or on behalf of Interface or any other Credit Party, or at any
time it is or becomes unlawful for Interface or any other Credit
Party to perform or comply with its obligations under any Credit
Document (including the IRB Collateral Documents), or the
obligations of Interface or any other Credit Party under any
Credit Document (including the IRB Collateral Documents) are not
or cease to be legal, valid and binding on Interface or any such
Credit Party;
Section 10.13. Default Under Interest Rate
Contract or Currency Contract. Any event or condition shall
occur or exist which causes, or permits any party thereto (other
than the Consolidated Company or Companies party thereto) to
cause, the termination or cancellation of the FNBC Currency
Contract or any other Interest Rate Contract or Currency Contract
(excluding any termination or cancellation effected at the option
of Interface in the exercise of Interface's business judgment or
any other termination or cancellation of such Interest Rate
Contract or Currency Contract not resulting from any breach of
such agreement or default thereunder by any Consolidated Company
or Companies), and as a result of such cancellation or termi-
nation, any of the Consolidated Companies would be required to
make net payments thereunder in excess of $2,500,000 in the ag-
gregate;
Section 10.14. Attachments. An attachment or
similar action shall be made on or taken against any of the
assets of any Consolidated Company with an Asset Value exceeding
$5,000,000 in aggregate and is not removed within 90 days of the
same being made;
Section 10.15. Accounts Receivable Facility.
There shall exist and continue for five (5) days any "Event of
Termination" as provided under the terms of any of the
Receivables Backup Purchase Agreements or the Receivables Sale
Agreements (collectively, the "Receivables Securitization
Agreements") other than an Event of Termination which arises
from: (i) the matters described in subsection 12.1(f) of the
Receivables Securitization Agreements; (ii) any reduction in
Interface's credit rating (or the imputed equivalent thereof);
(iii) the operation of a cross-termination provision in such
Receivables Securitization Agreements (that is, a provision in
such Receivables Securitization Agreements under which the
occurrence of any "Event of Termination" under any other
Receivables Securitization Agreement is also an Event of
Termination under such Receivables Securitization Agreements)
which is not otherwise an Event of Default hereunder; (iv) any
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Consolidated Company's failure to comply with, or its making of
any changes in or supplements to, its credit and collection
policies; (v) any failure by Interface to maintain the minimum
net worth required in Interface SPC under the terms of such
Receivables Securitization Agreements; (vi) any amendment of the
terms of any Consolidated Company's accounts receivable or any
contract relating thereto or any waiver by such Consolidated
Company of the terms and conditions of such contract; (vii) any
change in the character of the business of any of the
Consolidated Companies (which is not a violation of Section 9.09
hereof) or in their respective credit and collection policies;
(viii) Interface SPC's entering into or becoming a party to any
agreement or instruments incidental to its administration or
operation other than those expressly permitted under the terms of
such Receivables Securitization Agreement; (ix) any determination
that the payment by Interface SPC to any of the Consolidated
Companies of 100% of the net book value of the accounts
receivable does not constitute the "reasonably equivalent value"
of the accounts receivable and related rights sold by such
Consolidated Company to Interface SPC in connection with the
Accounts Receivable Facilities; (x) any change in the Certificate
of Incorporation or By-Laws of Interface SPC; (xi) any failure by
Interface SPC or Interface to comply with any of the affirmative
or negative covenants in such Receivables Securitization
Agreement which relate to the establishment and maintenance of
Interface SPC's separate legal identity; (xii) the past-due or
defaulted accounts receivable of any or all of the Consolidated
Companies exceeding any applicable limitations set forth in such
Receivables Securitization Agreement; (xiii) the aggregate
"Dilutions" (as such term is defined in such Receivables
Securitization Agreement) on any or all of the Consolidated
Companies' accounts receivable exceeding any applicable
limitation set forth in such Receivables Securitization
Agreement; or (xiv) the "Portfolio Turnover" (as such term is
used in such Receivables Securitization Agreement) exceeding any
applicable limitation set forth in such Receivables
Securitization Agreement; or
Section 10.16. 1997 Term Loan Agreement. There
shall exist or occur any "Event of Default" as provided under the
terms of the 1997 Term Loan Agreement.
ARTICLE XI.
THE CO-AGENTS; COLLATERAL AGENT
Section 11.01 Appointment of Co-Agents. Each
Multicurrency Syndicated Lender hereby designates FNBC as
Multicurrency Agent to administer all matters concerning the
Multicurrency Revolving Loans and to act as herein specified.
Each Domestic Syndicated Lender and Term Lender hereby designates
STBA as Domestic Agent to administer all matters concerning the
Domestic Revolving Loans (including, without limitation, the L/C
Subcommitments) and the Term Loans and to act as herein
specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note by the acceptance of a Note shall be deemed
irrevocably to authorize, the Appropriate Co-Agent to take such
actions on its behalf under the provisions of this Agreement, the
Letter of Credit Agreement, the other Credit Documents, and all
other instruments and agreements referred to herein or therein,
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and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of
the Appropriate Co-Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Co-Agents
may perform any of their duties hereunder by or through their
agents or employees.
Section 11.02. Appointment of Collateral Agent.
(a) Each Co-Agent and each Lender hereby designates STBA as Col-
lateral Agent and hereby authorizes the Collateral Agent to
enter into each of the Security Documents substantially in the
form attached hereto and to the Letter of Credit Agreement, and
to take all action contemplated thereby. All rights and remedies
under the Security Documents may be exercised by the Collateral
Agent for the benefit of the Co-Agents and the Lenders and the
other beneficiaries thereof upon the terms thereof. The Co-
Agents and the Lenders further agree that the Collateral Agent
may assign its rights and obligations as Collateral Agent under
any of the Security Documents to any affiliate of the Collateral
Agent or to any trustee, which assignee in each such case shall
(subject to compliance with any requirements of applicable law
governing the assignment of such Security Documents) be entitled
to all the rights of the Collateral Agent under and with respect
to the applicable Security Document.
(b) In each circumstance where, under any
provision of any Security Document, the Collateral Agent shall
have the right to grant or withhold any consent, exercise any
remedy, make any determination or direct any action by the
Collateral Agent under such Security Document, the Collateral
Agent shall act in respect of such consent, exercise of remedies,
determination or action, as the case may be, with the consent of
and at the direction of the Required Lenders; provided, however,
that no such consent of the Required Lenders shall be required
with respect to any consent, determination or other matter that
is, in the Collateral Agent's judgment, ministerial or
administrative in nature; provided, further, that in no event
shall the Collateral Agent be required, and in all cases shall be
fully justified in failing or refusing, to take any action under
or pursuant to any Security Document which, in the reasonable
opinion of the Collateral Agent, (a) would be contrary to the
terms of any Security Document or would subject it or its
officers, employees, or directors to liability, unless and until
the Collateral Agent shall be indemnified or tendered security to
its satisfaction by the Lenders against any and all loss, cost,
expense or liability in connection therewith, or (b) would be
contrary to law, in each case anything herein or elsewhere con-
tained to the contrary notwithstanding. In each circumstance
where any consent of or direction from the Required Lenders is
required, the Collateral Agent shall send to the Lenders a notice
setting forth a description in reasonable detail of the matter as
to which consent or direction is requested and the Collateral
Agent's proposed course of action with respect thereto. In the
event the Collateral Agent shall not have received a response
from any Lender within five (5) Business Days after such Lender's
receipt of such notice, such Lender shall be deemed to have
agreed to the course of action proposed by the Collateral Agent.
Section 11.03. Nature of Duties of Agents. The
Agents shall have no duties or responsibilities except those
expressly set forth in this Agreement, the Letter of Credit
Agreement, and the other Credit Documents. None of the Agents
nor any of their respective officers, directors, employees or
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agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or
their gross negligence or willful misconduct. The duties of the
Agents shall be ministerial and administrative in nature; the
Agents shall not have by reason of this Agreement or the Letter
of Credit Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, express or implied, is
intended to or shall be so construed as to impose upon the Agents
any obligations in respect of this Agreement, the Letter of
Credit Agreement, or the other Credit Documents except as ex-
pressly set forth herein.
Section 11.04. Lack of Reliance on the Agents.
(a) Independently and without reliance upon the
Agents, each Lender, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent investigation
of the financial condition and affairs of the Credit Parties in
connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly
provided in this Agreement or the Letter of Credit Agreement, the
Agents shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its
possession before the making of any Loans, or the issuance of any
Letters of Credit, or at any time or times thereafter.
(b) The Agents shall not be responsible to any
Lender for any recitals, statements, information, representations
or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the
Notes, the Guaranty Agreements, the Pledge Agreements, the Letter
of Credit Agreement, the L/C Cash Collateral Assignment, the IRB
Collateral Documents, or any other documents contemplated hereby
or thereby, or the financial condition of the Credit Parties, or
be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of
this Agreement, the Notes, the Guaranty Agreements, the Pledge
Agreements, the Letter of Credit Agreement, the L/C Cash
Collateral Assignment, the IRB Collateral Documents, or the other
documents contemplated hereby or thereby, or the financial
condition of the Credit Parties, or the existence or possible
existence of any Default or Event of Default; provided, however,
to the extent the Agents have been advised that a Lender has not
received any information formally delivered to the Agents
pursuant to Section 8.07, the Agents shall deliver or cause to be
delivered such information to such Lender.
Section 11.05. Certain Rights of the Agents. If
any Agent shall request instructions from the Required Lenders or
the Required Multicurrency Syndicated Lenders with respect to any
action or actions (including the failure to act) in connection
with this Agreement or the Letter of Credit Agreement, such Agent
shall be entitled to refrain from such act or taking such act,
unless and until the Agent shall have received instructions from
such Lenders; and the Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever
against any Agent as a result of such Agent acting or refraining
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from acting hereunder in accordance with the instructions of the
Required Lenders or the Required Multicurrency Syndicated Lenders
where required by the terms of this Agreement or the Letter of
Credit Agreement.
Section 11.06. Reliance by Agents. The Agents
shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cable gram,
radiogram, order or other documentary, teletransmission or
telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person. The Agents
may consult with legal counsel (including counsel for any Credit
Party), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to
be taken by it in good faith in accordance with the advice of
such counsel, accountants or experts.
Section 11.07. Indemnification of Agents. To the
extent the Agents are not reimbursed and indemnified by the
Credit Parties, each Lender will reimburse and indemnify (i) each
Appropriate Co-Agent, ratably according to the respective
principal amounts of the Loans and participations in Letters of
Credit outstanding by each Lender under the Facilities
administered by such Agent of which such Lender is a part (or if
no amounts are outstanding, ratably in accordance with their
respective Commitments under the Facilities administered by such
Agent of which such Lender is a part), and (ii) the Collateral
Agent, ratably according to the respective amounts of the Loans
and Letters of Credit outstanding under all Facilities (or if no
amounts are outstanding, ratably in accordance with the Total
Commitments), in either case, for and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against such
Agent in performing its duties hereunder, in any way relating to
or arising out of this Agreement or the other Credit Documents;
provided that no Lender shall be liable to any Agent for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or
willful misconduct.
Section 11.08. The Agents in their Individual
Capacity. With respect to its obligation to lend under this
Agreement, the Loans made by it and the Notes issued to it, and
its obligations pursuant to the Letter of Credit Agreement and
the reimbursement obligations to it thereunder, each Agent shall
have the same rights and powers hereunder as any other Lender or
holder of a Note and may exercise the same as though it were not
performing the duties specified herein; and the terms "Lenders",
"Required Lenders", "holders of Notes", or any similar terms
shall, unless the context clearly otherwise indicates, include
each of the Agents in its individual capacity. The Agents may
accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other business with
the Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified
herein, and may accept fees and other consideration from the
Consolidated Companies for services in connection with this
Agreement, the Letter of Credit Agreement, and otherwise without
having to account for the same to the Lenders.
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Section 11.09. Holders of Notes. The Agents may
deem and treat the payee of any Note as the owner thereof for all
purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the
Agents. Any request, authority or consent of any Person who, at
the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
Section 11.10. Successor Agents.
(a) Any Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers and may
be removed at any time with or without cause by the Required
Lenders; provided, however, the Collateral Agent may not resign
or be removed except where the Collateral Agent is also resigning
or being removed and a successor Collateral Agent has been
appointed under this Agreement and the 1997 Term Loan Agreement
and shall have accepted such appointment. Upon any such
resignation or removal, the Required Lenders shall have the
right, upon five days' notice to the Borrowers, to appoint a
successor Agent; provided, however, that no Person shall be
appointed as a successor Collateral Agent by the Required Lenders
unless such Person is simultaneously being appointed as
Collateral Agent under the 1997 Term Loan Agreement. If no suc-
cessor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Agent, then, upon five
days' notice to the Borrowers, the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall (i) be a
bank which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of
America or any State thereof, or any Affiliate of such bank,
having a combined capital and surplus of at least $100,000,000,
and (ii) in the case of a successor Collateral Agent,
simultaneously be appointed as Collateral Agent under the 1997
Term Loan Agreement.
(b) Upon the acceptance of any appointment as an
Agent hereunder and under the Letter of Credit Agreement by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was an Agent under this Agreement or the Letter of
Credit Agreement.
Section 11.11. Interests of FNBC and its
Affiliates. Each of the Lenders confirms and acknowledges that
FNBC has advised it that FNBC has engaged in other transactions
with, and performed financial advisory services for, Interface,
and further that certain affiliates of FNBC and a partnership
comprised of employees of an FNBC affiliate maintain ownership
interests in Bentley, as follows: (i) FNBC is party to certain
interest rate and currency exchange swap agreements and forward
rate agreements with one or more of the Consolidated Companies,
(ii) FNBC, through its Mergers and Acquisitions Group, served as
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financial advisor to Interface in connection with the Bentley
Acquisition, (iii) prior to the Bentley Acquisition, First
Chicago Investment Corporation, First Capital Corporation of
Chicago, and a partnership comprised of certain employees of
First Capital Corporation of Chicago (collectively, the "FNBC
Affiliates") owned, in the aggregate, a majority of the capital
stock of Bentley, and (iv) prior to the Bentley Acquisition, the
FNBC Affiliates elected a majority of the members of the Bentley
board of directors, including the member designated by the
Bentley board of directors to negotiate the sale of Bentley to
Interface. The FNBC Affiliates own a majority of the preferred
stock issued by Interface as a portion of the purchase price for
Bentley, and FNBC may continue to engage in other transactions
with, and perform financial advisory services for, Interface and
other Consolidated Companies. None of the foregoing
relationships or ownership interests shall preclude FNBC from
serving as Multicurrency Agent or Co-Agent hereunder or from
exercising all rights, privileges and remedies of a Lender under
this Agreement without regard to such relationships or ownership
interests.
ARTICLE XII.
MISCELLANEOUS
Section 12.01. Notices. All notices, requests
and other communications to any party hereunder shall be in
writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party at
its address or applicable teletransmission number set forth on
the signature pages hereof, or such other address or applicable
teletransmission number as such party may hereafter specify by
notice to the Co-Agents and the Borrowers. Each such notice,
request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answerback is
received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, (iii) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate confirmation is received, or
(iv) if given by any other means (including, without limitation,
by air courier), when delivered or received at the address
specified in this Section; provided that notices to the Co-Agents
shall not be effective until received.
Section 12.02. Amendments, Etc. No amendment or
waiver of any provision of this Agreement or the other Credit
Documents, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders (or, in the case of any amendment or
waiver of Section 6.02, all the Multicurrency Syndicated Lenders)
do any of the following: (i) waive any of the conditions speci-
fied in Sections 6.01, 6.02 or 6.03, or in Sections 3.1 or 3.2 of
the Letter of Credit Agreement, (ii) increase the Commitments or
other contractual obligations to the Borrowers under this
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Agreement or the Letter of Credit Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder or
under the Letter of Credit Agreement, (iv) postpone any date
fixed for the payment in respect of principal of, or interest on,
the Notes or any fees hereunder or under the Letter of Credit
Agreement, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or
identity of Lenders which shall be required for the Lenders or
any of them to take any action hereunder or under the Letter of
Credit Agreement, (vi) agree to release any of the Pledged Stock
from the Lien of the Security Documents, any funds in the L/C
Cash Collateral Account, or any collateral described in the IRB
Collateral Documents, to the extent securing the Obligations or
to release any Guarantor from its obligations under any Guaranty
Agreement (provided, that no agreement to any such release shall
be required from any Lenders in connection with the transactions
described in the proviso set forth in the definition of "Pledged
Stock" or in connection with a sale of Pledged Stock that is made
at a time when Interface has satisfied the requirements set forth
in Section 9.03(ii)(C) with respect to such sale), or (vii) amend
this Section 12.02 or Section 12.06. Furthermore, no amendment
or waiver of any provision of this Agreement or consent to any
departure by any Credit Party therefrom as set forth in
Section 4.02, 4.06 or 5.13 hereof, or to the definition of the
terms Currency, Payment Office, FCB Account or FC Bank, shall be
effective unless in writing and signed by at least Multicurrency
Syndicated Lenders holding at least 66 2/3% of the Multicurrency
Syndicated Loan Commitments and signed by the Appropriate Co-
Agent (the "Required Multicurrency Syndicated Lenders").
Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing and signed by the Co-Agents or the
Collateral Agent, as the case may be, in addition to the Lenders
required hereinabove to take such action, affect the rights or
duties of the Co-Agents or the Collateral Agent, as the case may
be, under this Agreement, the Letter of Credit Agreement, or
under any other Credit Document.
Section 12.03. No Waiver; Remedies Cumulative.
No failure or delay on the part of the Co-Agents, the Collateral
Agent, any Lender or any holder of a Note in exercising any right
or remedy hereunder or under the Letter of Credit Agreement or
any other Credit Document, and no course of dealing between any
Credit Party and the Co-Agents, the Collateral Agent, any Lender
or the holder of any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy
hereunder or under the Letter of Credit Agreement or any other
Credit Document preclude any other or further exercise thereof or
the exercise of any other right or remedy hereunder or
thereunder. The rights and remedies herein expressly provided
are cumulative and not exclusive of any rights or remedies which
the Co-Agents, the Collateral Agent, any Lender or the holder of
any Note would otherwise have. No notice to or demand on any
Credit Party not required hereunder or under the Letter of Credit
Agreement or any other Credit Document in any case shall entitle
any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
rights of the Co-Agents, the Collateral Agent, the Lenders or
the holder of any Note to any other or further action in any cir-
cumstances without notice or demand.
Section 12.04. Payment of Expenses, Etc. Each of
Interface and each other Borrower shall:
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(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable,
out-of-pocket costs and expenses of the Agents in
the administration (both before and after the
execution hereof and including advice of counsel
as to the rights and duties of the Agents and the
Lenders with respect thereto) of, and in
connection with the preparation, execution and
delivery of, preservation of rights under, en-
forcement of, and, after a Default or Event of
Default, refinancing, renegotiation or
restructuring of, this Agreement, the Letter of
Credit Agreement, and the other Credit Documents
and the documents and instruments referred to
therein, and any amendment, waiver or consent
relating thereto (including, without limitation,
the reasonable fees and disbursements of counsel
for the Agents), and in the case of enforcement of
this Agreement, the Letter of Credit Agreement, or
any Credit Document after an Event of Default, all
such reasonable, out-of-pocket costs and expenses
(including, without limitation, the reasonable
fees and disbursements of counsel), for any of the
Lenders;
(ii) subject, in the case of certain Taxes,
to the applicable provisions of Section 5.07(b),
pay and hold each of the Lenders harmless from and
against any and all present and future stamp,
documentary, and other similar Taxes with respect
to this Agreement, the Notes, the Letter of Credit
Agreement, and any other Credit Documents, any
collateral described therein, or any payments due
thereunder, and save each Lender harmless from and
against any and all liabilities with respect to or
resulting from any delay or omission to pay such
Taxes;
(iii) indemnify each Agent and Lender, and
their respective officers, directors, employees,
representatives and agents from, and hold each of
them harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred
by any of them (whether or not any of them is
designated a party thereto) (an "Indemnitee")
arising out of or by reason of any investigation,
litigation or other proceeding related to any
actual or proposed use of the proceeds of any of
the Loans or the Letters of Credit, or any Credit
Party's entering into and performing of the
Agreement, the Notes, the Letter of Credit
Agreement, or the other Credit Documents,
including, without limitation, the reasonable fees
and disbursements of counsel (including foreign
counsel) incurred in connection with any such
investigation, litigation or other proceeding;
provided, however, the Borrowers shall not be
obligated to indemnify any Indemnitee for any of
the foregoing arising out of such Indemnitee's
gross negligence or willful misconduct, or the
violation by such Indemnitee of any law, rule or
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regulation, unless such violation occurs directly
or indirectly as a result of an action, inaction,
representation or misrepresentation by or on
behalf of any Credit Party or other Consolidated
Company; and
(iv) without limiting the indemnities set
forth in subsection (iii) above, indemnify each
Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal,
response, abatement, cleanup, investigative,
closure and monitoring costs), losses, claims
(including claims for contribution or indemnity
and including the cost of investigating or
defending any claim and whether or not such claim
is ultimately defeated, and whether such claim
arose before, during or after any Credit Party's
ownership, operation, possession or control of its
business, property or facilities or before, on or
after the date hereof, and including also any
amounts paid incidental to any compromise or
settlement by the Indemnitee or Indemnitees to the
holders of any such claim), lawsuits, liabilities,
obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages
(including without limitation damages for
contamination or destruction of natural
resources), penalties and fines of any kind or
nature whatsoever (including without limitation in
all cases the reasonable fees, other charges and
disbursements of counsel in connection therewith)
incurred, suffered or sustained by that Indemnitee
based upon, arising under or relating to
Environmental Laws based on, arising out of or
relating to in whole or in part, the existence or
exercise of any rights or remedies by any
Indemnitee under this Agreement, the Letter of
Credit Agreement, any other Credit Document or any
related documents (but excluding those incurred,
suffered or sustained by any Indemnitee as a
result of any action taken by or on behalf of the
Lenders with respect to any Subsidiary of
Interface owned or controlled by the Lenders, the
Collateral Agent, or their nominees or designees,
as a result of their acquisition of Pledged Stock
pursuant to exercise of remedies under the Pledge
Agreements).
If and to the extent that the obligations of
Interface and each other Borrower under this
Section 12.04 are unenforceable for any reason,
Interface and each other Borrower hereby agree to
make the maximum contribution to the payment and
satisfaction of such obligations which is
permissible under applicable law.
Section 12.05. Right of Setoff. In addition to
and not in limitation of all rights of offset that any Lender or
other holder of a Note may have under applicable law, each Lender
or other holder of a Note shall, upon the occurrence of any Event
of Default and whether or not such Lender or such holder has made
any demand or any Credit Party's obligations are matured, have
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the right to appropriate and apply to the payment of any Credit
Party's obligations hereunder and under the Letter of Credit
Agreement and the other Credit Documents, all deposits of any
Credit Party (general or special, time or demand, provisional or
final) then or thereafter held by and other indebtedness or prop-
erty then or thereafter owing by such Lender or other holder to
any Credit Party, whether or not related to this Agreement or any
transaction hereunder.
Section 12.06. Benefit of Agreement.
(a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the
Borrowers may not assign or transfer any of its interest
hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans
at, to or for the account of, any of its branch offices or the
office of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of
its interests, rights and obligations under this Agreement
(including all or a portion of any of its Commitments and the
Loans at the time owing to it and the Notes held by it) and the
Letter of Credit Agreement to any Eligible Assignee; provided,
however, that (i) the Co-Agents and Interface must give their
prior written consent to such assignment (which consent shall not
be unreasonably withheld; it being agreed that, in the case of
any assignment of an L/C Subcommitment or other obligations under
the Letter of Credit Agreement, such consent will be properly
withheld if such assignee does not then possess the "Minimum
Required Rating" as provided in the Letter of Credit Agreement
and has not been approved by the L/C Issuer in its sole
discretion), (ii) the 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, (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, and (v)
if the assigning Lender is assigning all or any portion of its
interests, rights or obligations under this Agreement in respect
of such Lender's Term Loans, the assigning Lender shall also
assign to such Eligible Assignee a corresponding portion of its
interest, rights and obligations under the 1997 Term Loan
Agreement in respect of such assigning Lender's 1997 Term Loans;
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. From and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least
five (5) Business Days after the execution thereof, the assignee
- 120 -<PAGE>
thereunder shall be a party hereto and to the extent of the
interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and the
Letter of Credit Agreement. Within five (5) Business Days after
receipt of the notice and the Assignment and Acceptance,
Interface and each of the other Borrowers, at its own expense,
shall execute and deliver to the Appropriate Co-Agent, in
exchange for the surrendered Note or Notes, a new Note or Notes
to the order of such assignee in a principal amount equal to the
applicable Commitments or Term Loans assumed by it pursuant to
such Assignment and Acceptance and new Note or Notes to the
assigning Lender in the amount of its retained Commitment or
Commitments or amount of its retained Term Loans. Such new Note
or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes,
shall be dated the date of the surrendered Note or Notes which
they replace, and shall otherwise be in substantially the form
attached hereto.
(d) Each Lender may, without the consent of
Interface, any other Borrower or the Agents, sell participations
to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a
portion of its Commitments in the Loans owing to it and the Notes
held by it) and the Letter of Credit Agreement, provided,
however, that (i) no Lender may sell a participation in its
aggregate Commitments and Term Loans (after giving effect to any
permitted assignment hereof) in an amount in excess of fifty
percent (50%) of such aggregate Commitments and Term Loans,
except that no such maximum amount shall be applicable to any
such participation sold at any time there exists an Event of
Default hereunder, (ii) such Lender's obligations under this
Agreement and the Letter of Credit Agreement shall remain
unchanged, (iii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations,
and (iv) the participating bank or other entity shall not be
entitled to the benefit (except through its selling Lender) of
the cost protection provisions contained in Article V of this
Agreement, and (v) Interface, the other Borrowers and the Agents
and other Lenders shall continue to deal solely and directly with
each Lender in connection with such Lender's rights and
obligations under this Agreement, the Letter of Credit Agreement,
and the other Credit Documents, and such Lender shall retain the
sole right to enforce the obligations of Interface and the other
Borrowers relating to the Loans and the Letters of Credit, and to
approve any amendment, modification or waiver of any provisions
of this Agreement, the Letter of Credit Agreement, and the other
Credit Documents.
(e) Any Lender or participant may, in connection
with the assignment or participation or proposed assignment or
participation, pursuant to this Section, disclose to the assignee
or participant or proposed assignee or participant any
information relating to Interface or the other Consolidated
Companies furnished to such Lender by or on behalf of Interface
or any other Consolidated Company; provided that, prior to any
such disclosure of information designated by Interface as
confidential, the Lender proposing to make such assignment or
sell such participation shall obtain from such prospective
assignee or participant an agreement whereby such prospective
assignee or participant shall agree to preserve the
- 121 -<PAGE>
confidentiality of such confidential information consistent with
the provisions of Section 8.05.
(f) Any Lender may at any time assign all or any
portion of its rights in this Agreement and the Notes issued to
it to a Federal Reserve Bank; provided that no such assignment
shall release the Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in
Section 5.07(b) have been levied or imposed so as to require
withholdings or deductions by any Borrower and payment by such
Borrower of additional amounts to any Lender as a result thereof,
(ii) any Lender shall make demand for payment of any material
additional amounts as compensation for increased costs or for its
reduced rate of return pursuant to Section 5.10 or 5.17 hereof or
Section 2.6(a) of the Letter of Credit Agreement, (iii) any
Lender shall decline to consent to a modification or waiver of
the terms of this Agreement, the Letter of Credit Agreement, or
the other Credit Documents requested by Interface, or (iv) any
Multicurrency Syndicated Lender shall fail to have delivered to
Interface by December 31, 1995, the certificate or other document
from the United Kingdom Inland Revenue as specified in
Section 5.07(b)(v)(B) unless such Multicurrency Syndicated Lender
shall otherwise establish, to the satisfaction of Interface, that
it is exempt from withholding taxes imposed by the United
Kingdom, then and in such event, upon request from Interface
delivered to such Lender and the Co-Agents, such Lender shall
assign, in accordance with the provisions of Section 12.06(c),
all of its rights and obligations under this Agreement and the
other Credit Documents to another Lender or an Eligible Assignee
selected by Interface, in consideration for the payment by such
assignee to the Lender of the principal of, and interest on, the
outstanding Loans accrued to the date of such assignment, and the
assumption of such Lender's Total Commitment hereunder, together
with any and all other amounts owing to such Lender under any
provisions of this Agreement, the Letter of Credit Agreement, or
the other Credit Documents accrued to the date of such
assignment.
Section 12.07. Governing Law; Submission to
Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF
GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT, THE NOTES, THE LETTER OF CREDIT AGREEMENT, OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF
FULTON COUNTY, GEORGIA, OR THE SUPERIOR COURT OF COBB COUNTY,
GEORGIA, OR IN ANY COURT OF THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH BORROWER HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE TRIAL BY JURY, AND EACH BORROWER HEREBY IR-
REVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
- 122 -<PAGE>
(c) EACH BORROWER HEREBY IRREVOCABLY DESIGNATES
EACH OF G. KIMBROUGH TAYLOR, JR. AND KILPATRICK STOCKTON LLP,
EACH OF ATLANTA, GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL
AGENT TO RECEIVE, FOR AND ON BEHALF OF SUCH BORROWER, SERVICE OF
PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR ANY
DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON EITHER SUCH LOCAL AGENT WILL BE PROMPTLY
FORWARDED BY MAIL TO THE BORROWER AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF THE BORROWER TO
RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. IF FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY BE
MADE ON EITHER SUCH LOCAL AGENT, EACH BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the
Agents, any Lender, any holder of a Note or any Credit Party to
serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrowers in
any other jurisdiction.
Section 12.08. Independent Nature of Lenders'
Rights. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights pursuant to this
Agreement and its Notes, and it shall not be necessary for any
other Lender to be joined as an additional party in any
proceeding for such purpose.
Section 12.09. Counterparts. This Agreement may
be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 12.10. Survival. (a) The obligations of
the Borrowers under Sections 5.07(b), 5.10, 5.12, 5.13, 5.17,
12.04 and 12.15 hereof shall survive the payment in full of the
Notes after the Revolver/Multicurrency Maturity Date and the Term
Loan Final Maturity Date. All representations and warranties
made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement and the Letter of
Credit Agreement shall survive the execution and delivery of this
Agreement, the Letter of Credit Agreement, the other Credit
Documents, and such other agreements and documents, the making of
the Loans hereunder, the execution and delivery of the Notes, and
the issuance of the Letters of Credit.
(b) The obligations of the Co-Agents, the
Lenders, their assignees and participants under Sections 5.07(b),
8.05 and 12.06(e) hereof shall survive the payment in full of the
Notes after the Revolver/Multicurrency Maturity Date and the Term
Loan Final Maturity Date.
Section 12.11. Severability. In case any
provision in or obligation under this Agreement, the Letter of
Credit Agreement, or the other Credit Documents shall be invalid,
illegal or unenforceable, in whole or in part, in any
- 123 -<PAGE>
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be af-
fected or impaired thereby.
Section 12.12. Independence of Covenants. All
covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant,
shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
Section 12.13. Change in Accounting Principles,
Fiscal Year or Tax Laws. If (i) any preparation of the financial
statements referred to in Section 8.07 hereafter occasioned by
the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants
(or successors thereto or agencies with similar functions) result
in a material change in the method of calculation of financial
covenants, standards or terms found in this Agreement, (ii) there
is any change in Interface's fiscal quarter or fiscal year, or
(iii) there is a material change in federal tax laws which
materially affects any of the Consolidated Companies' ability to
comply with the financial covenants, standards or terms found in
this Agreement, the parties agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such
changes with the desired result that the criteria for evaluating
any of the Consolidated Companies' financial condition shall be
the same after such changes as if such changes had not been made.
Unless and until such provisions have been so amended, the
provisions of this Agreement shall govern.
Section 12.14. Headings Descriptive; Entire
Agreement. The headings of the several sections and
subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of
any provision of this Agreement. This Agreement, the Letter of
Credit Agreement, the other Credit Documents, and the agreements
and documents required to be delivered pursuant to the terms of
this Agreement and the Letter of Credit Agreement constitute the
entire agreement among the parties hereto and thereto regarding
the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such
subject matters.
Section 12.15. Judgment Currency.
(a) The Credit Parties' obligations hereunder and
under the Letter of Credit Agreement and the other Credit
Documents to make payments in a particular Currency (the
"Obligation Currency") shall not be discharged or satisfied by
any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery actually
results in the effective receipt by the Co-Agents, the Collateral
Agent or a Lender of the full amount of the Obligation Currency
expressed to be payable to the Co-Agents, the Collateral Agent or
such Lender under this Agreement, the Letter of Credit Agreement,
or the other Credit Documents. If for the purpose of obtaining
or enforcing judgment against any Borrower or other Credit Party
in any court or in any jurisdiction, it becomes necessary to
- 124 -<PAGE>
convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as
the "Judgment Currency") an amount due in the Obligation
Currency, the conversion shall be made, and the Currency
equivalent determined, in each case, as on the day immediately
preceding the day on which the judgment is given (such Business
Day being hereafter referred to as the "Judgment Currency
Conversion Date").
(b) If there is a change in the rate of exchange
prevailing between the Judgment Currency Conversion Date and the
date of actual payment of the amount due, the Credit Parties
covenant and agree to pay, or cause to be paid, such additional
amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange quoted by the
Multicurrency Agent at its prevailing rate for such Currency
exchange on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or
judicial award at the rate of exchange prevailing on the Judgment
Currency Conversion Date.
(c) For purposes of determining the Currency
equivalent for this Section, such amounts shall include any
premium and costs payable in connection with the purchase of the
Obligation Currency.
Section 12.16. Dollar Equivalent Computations.
Unless otherwise provided herein, to the extent that the
determination of compliance with any requirement of this
Agreement requires the conversion to U.S. Dollars of foreign
currency amounts, such U.S. Dollar amount shall be computed using
the Dollar Equivalent of the amount of such foreign currency at
the time such item is to be calculated or is to be or was
incurred, created or suffered or permitted to exist, or assumed
or transferred or sold for purposes of this Agreement (except if
such item was incurred, created or assumed, or suffered or
permitted to exist or transferred or sold prior to the date
hereof, such conversion shall be made based on the Dollar
Equivalent of the amounts of such foreign currency at the date
hereof).
Section 12.17. Amendment and Restatement; No
Novation. This Agreement constitutes an amendment and
restatement of the Existing Credit Agreement effective from and
after the Closing Date. The execution and delivery of this
Agreement shall not constitute a novation of any indebtedness or
other obligations owing to the Lenders or the Co-Agents under the
Existing Credit Agreement based on any facts or events occurring
or existing prior to the execution and delivery of this
Agreement. On the Closing Date, the credit facilities described
in the Existing Credit Agreement shall be amended and
supplemented by the Facilities described herein, and all loans
and other obligations of the Borrowers outstanding as of such
date under the Existing Credit Agreement shall be deemed to be
loans and obligations outstanding under the corresponding
facilities described herein, without further action by any
Person.
- 125 -<PAGE>
Section 12.18. References in Credit Documents. On
and after the Closing Date, each and every reference in the
Credit Documents to this Agreement, and to the capitalized terms
as defined in this Agreement (including, without limitation, the
terms "Loans", "Obligations", and "Facilities") shall be deemed
to refer to and mean this Agreement as herein amended and
restated, and such capitalized terms as defined and used in
this Agreement as herein amended and restated. The Borrowers
further confirm and agree that all such Credit Documents are and
shall remain in full force and effect on and after the Closing
Date.
- 126 -<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered in Atlanta,
Georgia, by their duly authorized officers as of the day and year
first above written.
Address for Notices: INTERFACE, INC.
2859 Paces Ferry Road
Suite 2000
Atlanta, GA 30339 By: /s/ Daniel T. Hendrix
Attention: Daniel T. Hendrix Daniel T. Hendrix
Senior Vice President
Telex No.:
Answerback:
Telecopy No.: 404/319-0070
<PAGE>
Address for Notices: INTERFACE EUROPE B.V.
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, GA 30339 By: /s/ Daniel T. Hendrix
Attention: Daniel T. Hendrix Daniel T. Hendrix
Attorney-in-Fact
Telex No.:
Answerback:
Telecopy No.: 404/319-0070<PAGE>
Address for Notices: INTERFACE EUROPE LIMITED
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, GA 30339 By: /s/ Daniel T. Hendrix
Attention: Daniel T. Hendrix Daniel T. Hendrix
Attorney-in-Fact
Telex No.:
Answerback:
Telecopy No.: 404/319-0070
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA,
as Domestic Agent and Collateral
25 Park Place Agent
23rd Floor
Atlanta, GA 30303
Attention: Thomas R. Banks By: /s/ Thomas R. Banks
Name: Thomas R. Banks
Title: Assistant Vice President
Telex No.: 542210
Answerback: TRUSCO INT ATL
By: /s/ David W. Parker
Telecopy No.: 404/588-8833 Name: David W. Parker
Title: Group Vice President
Payment Office:
25 Park Place, N.E.
Atlanta, GA 30303<PAGE>
Address for Notices: THE FIRST NATIONAL BANK OF CHICAGO,
as Multicurrency Agent
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
By: /s/ Judy Cornwell
Name: Judy Cornwell
Title: Authorized Agent
Telex No.:
Answerback:
By: /s/ Norene St. Lawrence
Telecopy No.: 312/732-5296 Name: Norene St. Lawrence
Title: Authorized Agent
Administrative Office:
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
Payment Offices:
(See Schedule 4.01)
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA
25 Park Place
23rd Floor
Atlanta, GA 30303
Attention: Thomas R. Banks By: /s/ Thomas R. Banks
Name: Thomas R. Banks
Title: Assistant Vice President
Telex No.: 542210
Answerback: TRUSCO INT ATL
By: /s/ David W. Penter
Telecopy No.: 404/588-8833 Name: David W. Penter
Title: Group Vice President
Domestic Lending Office:
One Park Place, N.E.
Atlanta, GA 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
Eurocurrency Lending Office:
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No. 542210
Answerback: TRUSCO INT ATL
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 3,250,000 13.00000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 13,000,000 7.64706%
DOMESTIC SWING LINE
COMMITMENT: 5,000,000 100.00000%
L/C SUBCOMMITMENT: $ 3,058,824 7.64706%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 10,500,000 13.12500%
TOTAL COMMITMENT $26,750,000 9.72727%
(EXCLUDING DOMESTIC
SWING LINE):
</TABLE>
<PAGE>
Address for Notices: THE FIRST NATIONAL BANK OF CHICAGO
Mail Suite 0324
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
By: /s/ Judy Cornwell
Name: Judy Cornwell
Title: Authorized Agent
Telex No.: 4330253
Answerback: FNBC UI
Telecopy No.: 312/732-5296
Administrative Office
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
Payment Offices:
(See Schedule 4.01)
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $3,250,000 13.00000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 4,500,000 2.64706%
L/C SUBCOMMITMENT: 1,058,824 2.64706%
MULTICURRENCY LOAN
COMMITMENT: 19,000,000 23.75000%
MULTICURRENCY SWING LINE
COMMITMENT: 5,000,000 100.00000%
TOTAL COMMITMENT $26,750,000 9.72727%
(EXCLUDING MULTICURRENCY
SWING LINE):
/TABLE
<PAGE>
Address for Notices: ABN AMRO BANK N.V.
Suite 1200, One Ravinia Drive
Atlanta, GA 30346
Attention: Mark Clegg By: /s/ Larry Kelley
Name: Larry Kelley
Telephone: 770/396-0066 Title: Group Vice President
Telex No.: 682 7258
Answerback: ABNBANKATL
By: /s/ Steven Hipsman
Telecopy No.: 770/395-9188 Name: Steven Hipsman
Title: 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
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 0 0.00000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 1,000,000 .58824%
L/C SUBCOMMITMENT: 235,294 .58824%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 17,500,000 21.87500%
TOTAL COMMITMENT: $18,500,000 6.72727%
</TABLE>
<PAGE>
Address for Notices: THE BANK OF TOKYO-MITSUBISHI,
LTD., ATLANTA AGENCY
133 Peachtree Street, N.E.
4970 Georgia-Pacific Center
Atlanta, GA 30303
Attention: Brandon Meyerson By: /s/ Brandon A. Meyerson
Name: Brandon A. Meyerson
Telephone: 404/577-2960 Title: Assistant Vice President
Telecopy No.: 404/577-1155
Telex No.: 6827300
Answerback: 6827300BOT ATL
Domestic Lending Office:
4970 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Eurocurrency Lending Office:
4970 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 1,600,000 6.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 18,425,000 10.83824%
L/C SUBCOMMITMENT: 4,335,294 10.83824%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $20,025,000 7.28182%
/TABLE
<PAGE>
Address for Notices: CIBC INC.
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200 By: /s/ William Humprhies
Atlanta, Georgia 30339 Name: William Humphries
Attention: William Humphries Title: Director, CIBC Wood Gundy
Securities Corp. AS AGENT
Telephone: 770/319-4906
Telecopy No.: 770/319-4954
Domestic Lending Office:
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Eurocurrency Lending Office:
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 2,100,000 8.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 6,425,000 3.77941%
L/C SUBCOMMITMENT: 1,511,765 3.77941%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: $11,000,000 13.75000%
TOTAL COMMITMENT: $19,525,000 7.10000%
</TABLE>
<PAGE>
Address for Notices: CREDITANSTALT-BANKVEREIN
Two Ravinia Drive
Suite 1680 By: /s/ Carl G. Drake
Atlanta, Georgia 30346 Name: Carl G. Drake
Attention: Carl Drake Title: Senior Associate
Telephone: 770/390-1848 By: /s/ Robert M. Biringer
Telecopy No.: 770/390-1851 Name: Robert M. Biringer
Title: Executive Vice President
Domestic Lending Office:
Two Greenwich Plaza
Greenwich, CT 06830-6353
Attn: Lisa Bruno
Eurocurrency Lending Office:
Two Greenwich Plaza
Greenwich, CT 06830-6353
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 2,000,000 8.00000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 22,750,000 13.38235%
L/C SUBCOMMITMENT: 5,352,941 13.38235%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $24,750,000 9.00000%
/TABLE
<PAGE>
Address for Notices: CREDIT LYONNAIS ATLANTA AGENCY
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E. By: /s/ David M. Cawrse
Suite 4400 Name: David M. Cawrse
Atlanta, GA 30303 Title: First Vice President &
Attention: David Cawrse Manager
Telephone: 404/524-3700
Telecopy No.: 404/584-5249
Domestic Lending Office:
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30303
Eurocurrency Lending Office:
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30303
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $1,600,000 6.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 18,425,000 10.83824%
L/C SUBCOMMITMENT: 4,335,294 10.83824%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $20,025,000 7.28182%
</TABLE>
<PAGE>
Address for Notices: THE SUMITOMO BANK LIMITED
303 Peachtree Street, N.E. By: /s/ Sybil H. Weldon
Suite 4420 Name: Sybil H. Weldon
Atlanta, GA 30308 Title: Vice President & Mgr.
Attention: Roger Arsham
Telephone: 404/524-6544
Telecopy No.: 404/523-7983 By: /s/ Robert N. Arsham
Name: Robert H. Arsham
Domestic Lending Office: Title: Vice President
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
Eurocurrency Lending Office:
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 1,600,000 6.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 11,800,000 6.94118%
L/C SUBCOMMITMENT: 2,776,471 6.94118%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $13,400,000 4.87273%
/TABLE
<PAGE>
Address for Notices: FIRST UNION NATIONAL BANK OF
GEORGIA
999 Peachtree Street, N.E. By: /s/Michalene Donegan
9th Floor Name: Michalene Donegan
Atlanta, GA 30309 Title: Voce {resodemt
Attention: Michalene Donegan
Telephone: 404/827-7154
Telecopy No.: 404/827-7199
Domestic Lending Office:
999 Peachtree Street, N.E.
9th Floor
Atlanta, GA 30309
Eurocurrency Lending Office:
999 Peachtree Street, N.E.
9th Floor
Atlanta, GA 30309
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 2,100,000 8.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 22,550,000 13.26471%
L/C SUBCOMMITMENT: 5,305,882 13.26471%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $24,650,000 8.96364%
</TABLE>
<PAGE>
Address for Notices: FLEET BANK OF MAINE
80 Exchange Street By: /s/ Neil C. Buitenbuys
Bangor, Maine 04401 Name: Neil C. Buitenbuys
Attention: Neil C. Buitenhuys Title: Vice President
Telephone: 207/941-6140
Telecopy No.: 207/941-6023
Domestic Lending Office:
511 Congress Street, P. O. Box 1280
Portland, Maine 04104-5006
Eurocurrency Lending Office:
511 Congress Street, P. O. Box 1280
Portland, Maine 04104-5006
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 3,300,000 13.20000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 13,025,000 7.66176%
L/C SUBCOMMITMENT: 3,064,706 7.66176%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $16,325,000 5.93636%
/TABLE
<PAGE>
Address for Notices: NATIONSBANK, N.A.
100 North Tryon Street
Mail Code NC1-007-08-11 By: /s/ David H. Dinkins
Charlotte, NC 28255 Name: David H. Dinkins
Attention: David Dinkins Title: Vice President
Telephone: 704/386-2951
Telecopy No.: 704/386-1270
Domestic Lending Office:
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, NC 28255
Eurocurrency Lending Office:
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, NC 28255
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 2,100,000 8.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 11,550,000 6.79412%
L/C SUBCOMMITMENT: 2,717,647 6.79412%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 11,000,000 13.75000%
TOTAL COMMITMENT: $24,650,000 8.96364%
</TABLE>
<PAGE>
Address for Notices: PNC BANK, NATIONAL ASSOCIATION
One PNC Plaza
Fifth Avenue and Wood Street By: /s/ Robert Mitchell, Jr.
Pittsburgh, PA 15265 Name: Robert J. Mitchell, Jr.
Attention: Robert J. Mitchell, Jr. Title: Vice President
Telephone: 412/762-6547
Telecopy No.: 412/762-6484
Domestic Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Eurocurrency Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 0 0.00000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 15,000,000 8.82353%
L/C SUBCOMMITMENT: 3,529,412 8.82353%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 0 0.00000%
TOTAL COMMITMENT: $ 15,000,000 5.45455%
/TABLE
<PAGE>
Address for Notices: WACHOVIA BANK, N.A.
(Formerly Wachovia Bank of
191 Peachtree Street, N.E. Georgia, N.A.
30th Floor By: /s/ Douglas W. Strickland
Atlanta, GA 30383 Name: Douglas W. Strickland
Attention: Doug Strickland Title: Vice President
Telephone: 404/332-1382
Telecopy No.: 404/332-6920
Domestic Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
Eurocurrency Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN BALANCE: $ 2,100,000 8.40000%
DOMESTIC SYNDICATED
LOAN COMMITMENT: 11,550,000 6.79412%
L/C SUBCOMMITMENT: 2,717,647 6.79412%
MULTICURRENCY SYNDICATED
LOAN COMMITMENT: 11,000,000 13.75000%
TOTAL COMMITMENT: $24,650,000 8.96364%
</TABLE>
==================================================================
TERM LOAN AGREEMENT
dated as of JUNE 25, 1997
among
INTERFACE, INC.,
THE LENDERS LISTED HEREIN,
SUNTRUST BANK, ATLANTA,
as Administrative Agent,
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent,
and
SUNTRUST BANK, ATLANTA,
as Collateral Agent
==================================================================
<PAGE>
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT made and entered into as of
June 25, 1997, by and among INTERFACE, INC., a Georgia corporation
("Interface"), SUNTRUST BANK, ATLANTA, a banking corporation organized
under the laws of the State of Georgia ("STBA"), THE FIRST NATIONAL BANK
OF CHICAGO, a national banking association ("FNBC"), the other banks and
lending institutions listed on the signature pages hereof, and any
assignees of STBA, FNBC, or such other banks and lending institutions
which become "Lenders" as provided herein (STBA, FNBC, and such other
banks, lending institutions, and assignees referred to collectively
herein as the "Lenders"), SUNTRUST BANK, ATLANTA, in its capacity as
administrative agent for the Lenders, and each successor agent for such
Lenders as may be appointed from time to time pursuant to Article IX
hereof (the "Administrative Agent"), THE FIRST NATIONAL BANK OF CHICAGO,
in its capacity as syndication agent hereunder (the "Syndication Agent";
the Administrative Agent and the Syndication Agent referred to
collectively herein as the "Co-Agents"), and SUNTRUST BANK, ATLANTA, in
its capacity as collateral agent for the Co-Agents and Lenders and each
successor collateral agent as may be appointed from time to time pursuant
to Article IX hereof (the "Collateral Agent");
W I T N E S S E T H:
WHEREAS, Interface has requested that the Lenders make
term loans to Interface in an aggregate principal amount of $75,000,000;
WHEREAS, the Lenders have agreed to make the requested
term loans to Interface, subject to the terms, conditions and
requirements set forth in this Term Loan Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, Interface, the Lenders, the Co-Agents
and the Collateral Agent agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. In addition to the other
terms defined herein, the following terms used herein shall have the
meanings herein specified (to be equally applicable to both the singular
and plural forms of the terms defined):
"Accounts Receivable Facilities" shall mean, collectively,
the receivables financing facilities evidenced by the Receivables
Transfer Agreements, the Receivables Sale Agreements and the Receivables
Backup Purchase Agreements pursuant to which (i) certain of the
Consolidated Companies shall sell accounts receivable to Interface SPC,
(ii) Interface SPC shall sell such accounts receivable (or undivided
ownership interests therein) to SPARCC or CIBC, and (iii) under certain
circumstances, Interface SPC shall sell such accounts receivable (or
undivided ownership interests therein) to the Bank Purchasers.
"Adjusted Working Capital" shall mean, as of the date of
any determination (i) the sum of all inventory, prepaid expenses and
accounts receivable of the Consolidated Companies, plus without
<PAGE>
duplication (ii) the aggregate outstanding balance of those accounts
receivable previously sold by Interface SPC pursuant to the Accounts
Receivable Facility, minus (iii) the sum of all accounts payable and
accrued expenses of the Consolidated Companies, in each case, determined
on a consolidated basis in conformity with GAAP.
"Adjusted LIBO Rate" shall mean, with respect to each
Interest Period for a Eurodollar Advance, the rate obtained by dividing
(a) LIBOR for such Interest Period by (b) a percentage equal to 1 minus
the then stated maximum rate (stated as a decimal) of all reserves
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of
the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D.
"Administrative Agent" shall mean STBA, acting in the
manner and to the extent described in Article IX, and any successor
Administrative Agent appointed pursuant to Article IX hereof.
"Advance" shall mean any principal amount advanced or to
be advanced and outstanding at any time under the Term Loans, which
Advance shall be made or outstanding in U.S. Dollars as a Base Rate
Advance, CD Rate Advance or Eurodollar Advance, as the case may be.
"Affiliate" of any Person means any other Person directly
or indirectly controlling, controlled by, or under common control with,
such Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any
Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that
Person.
"Agents" shall mean, collectively, the Co-Agents and the
Collateral Agent.
"Agreement" shall mean this Term Loan Agreement, as the
same may be amended, restated, or supplemented from time to time.
Applicable Margin shall mean, with respect to all
outstanding Term Loans for any day, the applicable percentage determined
from the chart set forth below based on Interface s Funded Debt Coverage
Ratio calculated as of the relevant determination date:
Funded Debt
Coverage Ratio Applicable Margin
Greater than or equal to 4.00 1.00%
Less than 4.00, but greater than
or equal to 3.50 .750%
Less than 3.50, but greater than
or equal to 3.00 .625%
Less than 3.00, but greater than
or equal to 2.50 .500%
Less than 2.50, but greater than
or equal to 2.00 .400%
Less than 2.00 .350%
- 2 -<PAGE>
Each change in the Applicable Margin resulting from a change in the
Funded Debt Coverage Ratio shall be effective with respect to all
outstanding Term Loans from and after the date that is five (5) Business
Days after the date of delivery to the Administrative Agent of the
financial statements and certificates required by Section 6.07(a), (b),
and (c), as applicable, indicating such change, until the date that is
five (5) Business Days immediately following the next date of delivery of
such financial statements and certificates indicating another such
change. Notwithstanding the foregoing, at any time during which
Interface has failed to deliver the financial statements and certificates
when required by Section 6.07(a), (b), and (c), as applicable, the
Applicable Margin with respect to Term Loans then outstanding shall be
1.00%.
"Asset Sale" shall mean any sale or other disposition (or
a series of related sales or other dispositions), including without
limitation, loss, damage, destruction or taking, by any Consolidated
Company to any Person other than a Consolidated Company, of any property
or asset (including capital stock but excluding the issuance and sale by
Interface of its own capital stock) having an aggregate Asset Value in
excess of $100,000, other than (i) sales made in the ordinary course of
business of any Consolidated Company and (ii) sales of accounts
receivables (or undivided ownership interests therein) of a Consolidated
Company pursuant to the Accounts Receivable Facilities.
"Asset Value" shall mean, with respect to any property or
asset of any Consolidated Company, an amount equal to the greater of
(i) the book value of such property or asset as established in accordance
with GAAP, and (ii) the fair market value of such property or asset as
determined in good faith by the board of directors (or equivalent
governing body in the case of any Foreign Subsidiary) of such
Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in
accordance with the terms of this Agreement and substantially in the form
of Exhibit H.
"Bank Purchasers" shall mean, collectively, CIBC and each
other financial institution, if any, that becomes a party to the
Receivables Backup Purchase Agreements, and their respective successors
and assigns.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978,
as amended and in effect from time to time (11 U.S.C. Sec. 101 et seq.).
"Base Rate" shall mean the following rate (with any change
in the Base Rate to be effective as of the date of change of either of
the following rates): the higher of (a) the rate which the
Administrative Agent publicly announces from time to time to be its prime
lending rate, as in effect from time to time, and (b) the Federal Funds
Rate, as in effect from time to time, plus one-half of one percent
(0.50%) per annum. The Administrative Agent's prime lending rate is a
reference rate and does not necessarily represent the lowest or best rate
charged to customers; the Administrative Agent may make commercial loans
or other loans at rates of interest at, above or below the Administrative
Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or out-
standing as a portion of the Term Loans bearing interest based on the
Base Rate as provided in Section 3.03(a)(i).
"Bentley" shall mean Bentley Mills, Inc., a Delaware
corporation.
- 3 -<PAGE>
"Bentley Acquisition" shall mean the acquisition by In-
terface of all the capital stock of Bentley through the consummation of
the transactions described in the Bentley Purchase Agreement, other
purchases of the capital stock of Bentley and, if necessary, the merger
of a Consolidated Company with and into Bentley.
"Bentley Purchase Agreement" shall mean that certain
Agreement for Purchase of Capital Stock dated as of June 8, 1993, among
Interface, Bentley, First Capital Corporation of Chicago, Madison
Dearborn Partners IV, Chrysler Capital Corporation, and Royce Renfroe, as
the same may hereafter be amended, restated, or supplemented from time to
time as permitted by Section 9.13(b), providing for the purchase by
Interface of capital stock of Bentley, as follows: (i) 32,700 shares
(representing 85.7%) of the issued and outstanding shares of Bentley's
Senior Preferred Stock, (ii) 15,621.5 shares (representing 78.5%) of the
issued and outstanding shares of Bentley's Junior Preferred Stock,
(iii) 826,920 shares (representing 76.2%) of the issued and outstanding
shares of Bentley's Class A Common Stock, and (iv) 490,453 shares (repre-
senting 85.8%) of the issued and outstanding shares of Bentley's Class B
Common Stock, together with all additional shares of such capital stock
of each other shareholder of Bentley that subsequently becomes a party to
such Agreement.
"Borrowing" shall mean the incurrence of Advances of one
Type concurrently having the same Interest Period (except as otherwise
provided in Sections 3.09 and 3.10) or the continuation or conversion of
an existing Borrowing or Borrowings in whole or in part.
"Business Day" shall mean any day excluding Saturday,
Sunday and any other day on which banks are required or authorized to
close in Atlanta, Georgia, New York, New York or Chicago, Illinois and,
if the applicable Business Day relates to Eurodollar Advances, on which
trading is not carried on by and between banks in deposits of U.S.
dollars in the applicable interbank Eurodollar market.
"CD Rate Advance" shall mean an Advance made or out-
standing as a portion of the Term Loans, bearing interest based on the
Fixed CD Rate as provided in Section 3.03(a)(ii).
"CIBC" shall mean Canadian Imperial Bank of Commerce, a
banking institution organized and existing under the laws of Canada, and
its successors and assigns.
"Capital Expenditures" shall mean, for any period, the sum
of (i) expenditures (whether paid in cash or accrued as a liability,
including the portion of capital leases originally incurred during such
period that is capitalized on the consolidated balance sheet of the
Consolidated Companies) by the Consolidated Companies during that period
that, in conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
financial statements of the Consolidated Companies, and (ii) to the
extent not included in clause (i) above, expenditures for all net non-
current assets of businesses acquired by the Consolidated Companies
during that period, including all purchase price adjustments, other than
such assets acquired in transactions where all or substantially all of
the consideration paid for such assets consisted of capital stock of a
Consolidated Company.
"Cash Taxes Paid" shall mean, for any fiscal period of
Interface, the provision of the Consolidated Companies for taxes paid as
shown on the income statement of Interface for such period minus any
- 4 -<PAGE>
increase (or plus any decrease) in the provision for deferred taxes of
the Consolidated Companies as included in the long-term liabilities of
Interface, determined on a consolidated basis in accordance with GAAP.
"Certificate of Deposit Rate" shall mean, with respect to
each Interest Period for a CD Rate Advance, the rate (rounded, if
necessary, to the next higher 1/16 of 1.0%, if the rate is not such a
multiple), as determined by the Administrative Agent at approximately
9:00 A.M. (Atlanta, Georgia time) on the first day of the Interest Period
for which such Certificate of Deposit Rate is to be applicable,
identified on Telerate as the consensus bid rate for secondary
certificates of deposit in an aggregate amount approximately comparable
to the CD Rate Advance to which such Certificate of Deposit Rate is to be
applicable and with a maturity equal to such Interest Period. As of the
date of the execution of this Agreement, such consensus bid rate appears
on page 5 of Telerate. If the foregoing rate is unavailable on Telerate
for any reason, then such rate shall be determined by the Administrative
Agent from the comparable rate quoted on another interest rate reporting
service of recognized standing as designated by the Administrative Agent
to Interface and the Lenders.
"Change in Control" shall mean and be deemed to occur on
the earliest of, and upon any subsequent occurrence of:
(a) at any time during which the holders of
Interface's Class B common stock are entitled to elect a
majority of Interface's board of directors, the members of
the Existing Shareholder Group shall at any time fail to
be the "beneficial owners" (as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934 (the
"Exchange Act")) of a majority of the issued and
outstanding shares of Interface's Class B common stock;
(b) at any time during which the holders of
Interface's Class B common stock have ceased to be
entitled to elect a majority of Interface's board of
directors, (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Existing Shareholder Group, shall become
the "beneficial owner" (as defined in Rules 13d-3 and 13d-
5 under the Exchange Act) of more than 35% of the total
capital stock of Interface entitled to vote for the
election of directors (the "Voting Stock"), if at such
time the members of the Existing Shareholder Group (A)
"beneficially own" (as so defined) a lower percentage of
the Voting Stock than such other person or "group" and (B)
do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority
of the board of directors of Interface, or (ii) Interface
consolidates with, or merges with or into, another person
or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any
person, or any person consolidates with, or merges with or
into, Interface, in any such event pursuant to a
transaction in which the outstanding Voting Stock of
Interface is converted into or exchanged for cash,
securities or other property, other than any such
transaction where (A) the outstanding Voting Stock of
Interface is converted into or exchanged for (1) Voting
Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation or (2) cash,
securities and other property in an amount which could
- 5 -<PAGE>
then be paid by Interface pursuant to Section 7.04, or a
combination thereof, and (B) immediately after such
transaction no "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act),
excluding the members of the Existing Shareholder Group,
is the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage
of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 50% of the total
Voting Stock of the surviving or transferee corporation;
(c) at any time during any consecutive two-year
period, individuals who at the beginning of such period
constituted the board of directors of Interface (together
with any new directors whose election by such board of
directors or whose nomination for election by the
stockholders of Interface was approved by a vote of 66-
2/3% of the directors then still in office who were either
directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of
the board of directors of Interface then in office; or
(d) Interface is liquidated or dissolved or adopts a
plan of liquidation.
"Change in Control Provision" shall mean any term or
provision contained in any indenture, debenture, note, or other agreement
or document evidencing or governing Interface Control Debt which
requires, or permits the holder(s) of such Interface Control Debt to
require, that such Interface Control Debt be redeemed, repurchased,
defeased, prepaid or repaid, either in whole or in part, or the maturity
of such Interface Control Debt to be accelerated in any respect, as a
result of a change in ownership of the capital stock of Interface or
voting rights with respect thereto.
"Class B Shareholders' Agreement" shall mean that certain
Voting Agreement for Interface, Inc. Class B Common Stock Shareholders
dated as of April 13, 1993, by and among Ray C. Anderson and
approximately 38 other holders of Class B common stock of Interface,
pursuant to which Ray C. Anderson is entitled to direct the voting of the
shares of Class B common stock subject thereto.
"Collateral Agent" shall mean STBA acting in the capacity
as collateral agent, collateral trustee, pledgee, secured party, or any
similar capacity under any Security Document, any nominee or designee of
STBA acting in such capacity, and any successor collateral agent
appointed from time to time pursuant to Article IX.
"Consolidated Companies" shall mean, collectively, In-
terface and all of its Subsidiaries.
"Consolidated EBITA" shall mean, for any fiscal period of
Interface, an amount equal to (A) the sum for such fiscal period of
Consolidated Net Income (Loss) plus, to the extent subtracted in
determining such Consolidated Net Income (Loss), provisions for taxes
based on income, Consolidated Interest Expense, Subordinated Debentures
Redemption Charge, and amortization of goodwill and deferred financing
costs, minus (B) any items of gain (or plus any items of loss) which were
included in determining such Consolidated Net Income (Loss) and were (x)
- 6 -<PAGE>
not realized in the ordinary course of business or (y) the result of any
sale of assets.
"Consolidated EBITDA" shall mean, for any fiscal period of
Interface, an amount equal to (i) Consolidated EBITA for such period,
plus (ii) to the extent subtracted in determining Consolidated Net Income
(Loss) for such period, depreciation expense of the Consolidated
Companies determined for such period in conformity with GAAP.
"Consolidated Interest Expense" shall mean, for any fiscal
period of Interface, total interest expense of the Consolidated Companies
(including without limitation, interest expense attributable to
capitalized leases in accordance with GAAP, all capitalized interest, all
commissions, discounts and other fees and charges owed with respect to
bankers acceptance financing, and total interest expense (whether shown
as interest expense, other expense, or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any
fiscal period of Interface, the net income (or loss) of the Consolidated
Companies on a consolidated basis for such period (taken as a single
accounting period) determined in conformity with GAAP, but excluding
therefrom (to the extent otherwise included therein) (i) any gains or
losses, together with any related provision for taxes, realized upon any
sale of assets other than in the ordinary course of business, (ii) any
income or loss of any Person accrued prior to the date such Person
becomes a Subsidiary of Interface or is merged into or consolidated with
any Consolidated Company or all or substantially all of such Person's
assets are acquired by any Consolidated Company, and (iii) the income of
any Consolidated Company to the extent that the declaration or payment of
dividends or similar distributions by such Consolidated Company of that
income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation.
"Consolidated Net Worth" shall mean, as of any date of
determination, Shareholders' Equity of Interface, excluding (i) the
effects of foreign currency translation adjustments under Financial
Accounting Standards Board Statement No. 52 as in effect on the date
hereof, and (ii) after-tax gains on the sales of assets outside the
ordinary course of business of the Consolidated Companies and any after-
tax gains with respect to pension reversions, in any case with respect to
(i) and (ii) above, as such adjustments or gains occur subsequent to
December 29, 1991.
"Consolidated Total Liabilities" shall mean, as at any
date of determination, total liabilities of the Consolidated Companies
determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any agreement,
instrument or undertaking under which such Person is obligated or by
which it or any of the property owned by it is bound.
"Contribution Agreement" shall mean the Contribution
Agreement executed by Interface and each of the Guarantors, substantially
in the form of Exhibit C attached hereto, as the same may be amended,
restated or supplemented from time to time.
"Convertible Preferred Stock" shall mean Interface's
Series A Cumulative Convertible Preferred Stock having an aggregate
- 7 -<PAGE>
liquidation value of $25,000,000 and 7.0% cumulative dividend, being
convertible into shares of Interface's Class A common stock at the rate
of one share of Class A common stock for each $14.7875 of "conversion
value" of such Preferred Stock (as defined in the Articles of Amendment
of Interface executed with respect to such Preferred Stock and subject to
adjustments as provided therein), and being subject to redemption at the
option of the holders thereof not earlier than June 1, 2003, on the terms
and conditions set forth in such Articles of Amendment.
"Credit Agreement" shall mean the Second Amended and
Restated Credit Agreement dated as of June 25, 1997, among Interface,
Interface Europe B.V., Interface Europe Limited, SunTrust Bank, Atlanta,
as Domestic Agent and Collateral Agent, The First National Bank of
Chicago, as Multicurrency Agent, and the other banks and financial
institutions listed on the signature pages thereof or that otherwise
become a party thereto, as the same may be further amended, restated or
supplemented from time to time.
"Credit Agreement Term Loans" shall mean the "Term Loans"
made to Interface pursuant to Article II of the Credit Agreement.
"Credit Documents" shall mean, collectively, this Agree-
ment, the Notes, the Guaranty Agreements, the Pledge Agreements, and all
other Security Documents.
"Credit Parties" shall mean, collectively, Interface and
the Guarantors (including all Persons that are currently Guarantors and
all Persons who may at any time in the future become Guarantors), and
every other Person who from time to time executes a Security Document
with respect to all or any portion of the Obligations.
"Currency Contracts" shall mean any forward contracts,
futures contracts, foreign exchange contracts, currency swap agreements,
and other similar agreements and arrangements entered into by any
Consolidated Company designed to protect any Consolidated Company against
fluctuations in foreign exchange rates.
"Default" shall mean any condition or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"Distributor Credit Facilities" shall mean, collectively,
the unsecured lines of credit established by retail distributors of
commercial products of the Consolidated Companies to fund such retail
distributors' working capital needs and having maturities in each case no
longer than two (2) years with annual renewals thereafter, as such lines
of credit were in effect immediately prior to the time that Interface or
its Subsidiaries acquired an ownership interest in, or all or a
substantial portion of the assets or business of, such retail
distributors.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"Dollar Equivalent" shall mean, with respect to any mon-
etary amount in a currency other than U.S. Dollars, at any time for the
determination thereof, the amount of U.S. Dollars obtained by converting
such currency involved in such computation into U.S. Dollars at the spot
rate for the purchase of U.S. Dollars with the applicable currency as
quoted by FNBC as of the close of business on the date of determination
thereof specified herein or, if the date of determination thereof is not
otherwise specified herein, on the date two applicable Business Days
prior to such determination.
- 8 -<PAGE>
"Eligible Assignee" shall mean any financial institution
reasonably acceptable to Interface and the Co-Agents.
"Environmental Laws" shall mean all federal, state, local
and foreign statutes and codes or regulations, rules or ordinances
issued, promulgated, or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or
asbestos containing material or exposure to asbestos or asbestos
containing material), relating to pollution or protection of the
environment and relating to public health and safety, relating to
(i) emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by
any Environmental Law into the environment (including without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), or (ii) the manufacture, processing, distribution, use, genera-
tion, treatment, storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil or any fraction
thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without
limitation (i) the Clean Air Act (42 U.S.C. Sec. 7401 et seq.), (ii) the
Clean Water Act (33 U.S.C. Sec. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. Sec. 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. Sec. 9601 et seq.),
and (vi) all applicable national and local hindrance laws (including,
without limitation "hinderwet") or regulations and the specific terms of
hindrance licenses granted to the Heuga Entities and with all national
and local building, zoning, environmental control or other similar laws
or regulations under specific terms of construction licenses (including,
without limitation, "bouwvergunningen").
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person,
each trade or business (whether or not incorporated) which is a member of
a group of which that Person is a member and which is under common
control within the meaning of the regulations promulgated under
Section 414 of the Tax Code.
"Escrow Letter" shall mean a letter agreement between
Interface and the Collateral Agent substantially in the form of Exhibit D
hereto.
"Eurodollar Advance" shall mean an Advance made or out-
standing in U.S. Dollars as a portion of the Term Loans bearing interest
based on the Adjusted LIBO Rate as provided in Section 3.03(a)(iii).
"Event of Default" shall have the meaning provided in
Article VIII.
"Excess Cash Flow" shall mean, for any fiscal year of
Interface (A) the sum of the amounts for such fiscal year of Con-
solidated Net Income (Loss), plus (to the extent subtracted in
determining such Consolidated Net Income (Loss)) depreciation expense,
amortization expense, provisions for deferred tax expense based on income
- 9 -<PAGE>
(or minus provisions for deferred tax credit, as the case may be), and
other non-cash items reducing Consolidated Net Income (Loss) (or minus
other non-cash items increasing Consolidated Net Income (Loss)), as
determined in accordance with GAAP, all as determined on a consolidated
basis for the Consolidated Companies, minus (B) the sum of (i) Capital
Expenditures for such fiscal year, (ii) the amount by which Adjusted
Working Capital as determined on the last day of such fiscal year exceeds
(or minus the amount by which such Adjusted Working Capital is less than)
Adjusted Working Capital as determined on the last day of the preceding
fiscal year (such changes in Adjusted Working Capital caused by currency
fluctuations to be calculated in accordance with FASB-52), (iii) required
principal payments on the Term Loans pursuant to Section 2.02(b) and
required principal payments on the Credit Agreement Term Loans pursuant
to Section 2.02(b) of the Credit Agreement, during such fiscal year,
(iv) regularly scheduled principal payments on other Indebtedness of the
Consolidated Companies as permitted under Section 7.01 during such fiscal
year, and (v) the total amount of regularly scheduled cash dividends with
respect to capital stock paid by Interface during such fiscal year as
permitted under Section 7.04.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, and any successor statute thereto.
"Existing Shareholder Group" shall mean (i) for so long as
Ray C. Anderson shall be living and is performing the duties of chairman
of Interface, Ray C. Anderson and each other party to the Class B
Shareholders' Agreement, Daniel T. Hendrix, Charles R. Eitel, and Brian
L. DeMoura, and (ii) at all times thereafter, the individuals listed on
Schedule 8.10; provided that in the case of each individual referred to
in the preceding clauses (i) and (ii), for purposes of this definition
the reference to such individual shall be deemed to include the members
of such individual's immediate family, such individual's estate, and any
trusts established by such individual (whether inter vivos or
testamentary) for the benefit of members of such individual's immediate
family.
"FASB-52" shall mean Financial Accounting Standards Board
Statement No. 52, as in effect on the date of this Agreement, specifying
applicable accounting principles with respect to translation of foreign
currencies.
"Facility" shall mean the credit facility made available
to Interface pursuant to the Term Loan Commitments.
"Federal Funds Rate" shall mean for any period, a fluc-
tuating interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds transactions
with member banks of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by the Administrative
Agent.
"Final Maturity Date" shall mean the earlier of (i)
December 31, 2001, and (ii) the date on which all amounts outstanding
under this Agreement have been declared or have automatically become due
and payable pursuant to the provisions of Article VIII.
"FNBC Currency Contract" shall mean the Interest Rate and
Currency Exchange Agreement dated as of June 30, 1992, between Heuga
- 10 -<PAGE>
Nederland B.V. (now Scherpenzeel B.V.) and The First National Bank of
Chicago (acting through its London Branch), together with all exhibits
and schedules thereto and all confirmations of transactions executed
thereunder, as amended by the Amendment to Interest Rate and Currency
Exchange Agreement dated as of January 9, 1995, and as the same have been
and hereafter may be further amended, restated or supplemented from time
to time.
"Fixed CD Rate" shall mean, with respect to each Interest
Period for a CD Rate Advance, the sum of (i) the rate obtained by
dividing (x) the Certificate of Deposit Rate for such Interest Period by
(y) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserve requirements as specified in Regulation D
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable during such Interest Period to new
nonpersonal time deposits in the United States in an amount equal to or
in excess of $100,000 with a maturity comparable to such Interest Period
of any member bank of the Federal Reserve System, plus (ii) the then
daily net annual assessment rate as estimated by the Administrative Agent
for determining the then current annual assessment payable to the Federal
Deposit Insurance Corporation for insuring time deposits of the
Administrative Agent in the United States.
"Fixed Rate Advance" shall mean a CD Rate Advance or
Eurodollar Advance.
"Foreign Plan" shall mean any pension, profit sharing,
deferred compensation, or other employee benefit plan, program or
arrangement maintained by any Foreign Subsidiary which, under applicable
local law, is required to be funded through a trust or other funding
vehicle.
"Foreign Subsidiary" shall mean each Consolidated Company
that is organized under the laws of a jurisdiction other than the United
States of America or any State thereof.
"Funded Debt" shall mean all Indebtedness for money bor-
rowed, Indebtedness evidenced or secured by purchase money Liens,
capitalized leases, conditional sales contracts and similar title
retention debt instruments, and Indebtedness evidenced by bonds,
debentures, notes or other similar instruments, including all current
maturities of such Indebtedness. The calculation of Funded Debt shall
include all Funded Debt of the Consolidated Companies, plus (i) all
Funded Debt of other Persons to the extent guaranteed by a Consolidated
Company, to the extent supported by a letter of credit issued for the
account of a Consolidated Company, or as to which and to the extent which
a Consolidated Company or its assets otherwise have become liable for
payment thereof, (ii) the aggregate outstanding "Investment" of the
purchasers pursuant to the Receivables Sale Agreements, (iii) the
aggregate outstanding "Investment" of the purchasers pursuant to the
Receivables Backup Purchase Agreements plus (without duplication)
(iv) any other amounts due and owing to the Bank Purchasers pursuant to
the Receivables Backup Purchase Agreements.
"Funded Debt Coverage Ratio" shall mean, as of the last
day of any fiscal quarter of Interface, the ratio of (A) Funded Debt as
of such day, to (B) the sum of Consolidated EBITDA for the fiscal quarter
then ending and the immediately preceding three fiscal quarters.
"GAAP" shall mean generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
- 11 -<PAGE>
statements and pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable to
the circumstances as of the date of determination.
"Guarantors" shall mean, collectively, Interface,
Interface Interior Fabrics, Inc. (formerly 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,
Intek, Inc., Toltec Fabrics, Inc., Interface Architectural Resources,
Inc. (formerly C-Tec, Inc.), Flooring Consultants, Inc., Lasher/White
Carpet Company, Inc., B. Shehadi & Sons, Inc., the 1996 Reorganization
Credit Parties, and all other Material Subsidiaries (other than Interface
SPC) that are not Foreign Subsidiaries, and their respective successors
and permitted assigns.
"Guaranty" shall mean any contractual obligation, con-
tingent or otherwise, of a Person with respect to any Indebtedness or
other obligation or liability of another Person, including without
limitation, any such Indebtedness, obligation or liability directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including contractual obligations
(contingent or otherwise) arising through any agreement to purchase,
repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or any agreement to provide funds for
the payment or discharge thereof (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to
make any payment other than for value received. The amount of any
Guaranty shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which
guaranty is made or, if not so stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person
is required to perform thereunder) as determined by such Person in good
faith.
"Guaranty Agreement" shall mean the Subsidiary Guaranty
Agreement executed by each of the Guarantors in favor of the Lenders and
the Co-Agents, substantially in the form of Exhibit B, as the same may be
amended, restated or supplemented from time to time.
"Hazardous Substances" shall have the meaning assigned to
that term in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Acts of 1986.
"Heuga Entities" shall mean Interface Europe B.V. (for-
merly Interface Heuga B.V.) and all Subsidiaries of Interface Europe B.V.
"Indebtedness" of any Person shall mean, without dupli-
cation (i) all obligations of such Person which in accordance with GAAP
would be shown on the balance sheet of such Person as a liability
(including, without limitation, obligations for borrowed money and for
the deferred purchase price of property or services, and obligations
evidenced by bonds, debentures, notes or other similar instruments);
(ii) all rental obligations under leases required to be capitalized under
GAAP; (iii) all Guaranties of such Person (including contingent
reimbursement obligations under undrawn letters of credit);
(iv) Indebtedness of others secured by any Lien upon property owned by
such Person, whether or not assumed; (v) obligations or other
liabilities under Currency Contracts, Interest Rate Contracts, or similar
- 12 -<PAGE>
agreements or combinations thereof; and (vi) Redeemable Capital Stock of
such Person valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued dividends. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which
does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Agreement, and if such price
is based on, or measured by, the fair market value of such Redeemable
Capital Stock, such fair market value shall be determined in good faith
by the board of directors of the issuer of such Redeemable Capital Stock.
"Intercompany Loan Documents" shall mean, collectively,
the promissory notes and all related loan, subordination, and other
agreements relating in any manner to the Intercompany Loans.
"Intercompany Loans" shall mean, collectively, (i) the
loans more particularly described on Schedule 5.20 and (ii) those loans
or other extensions of credit made by any Consolidated Company to another
Consolidated Company satisfying the terms and conditions set forth in
Section 7.01(h) or as may otherwise be approved in writing by the Co-
Agents; provided that, the advances made pursuant to the Receivables
Subordinated Notes shall not constitute Intercompany Loans.
"Interest Coverage Ratio" shall mean the ratio of Con-
solidated EBITA to Consolidated Interest Expense.
"Interest Period" shall have the meaning set forth in
Section 3.04.
"Interest Rate Contracts" shall mean any forward con-
tracts, futures contracts, interest rate exchange agreements, interest
rate cap agreements, interest rate collar agreements, and other similar
agreements and arrangements entered into by any Consolidated Company
designed to protect any Consolidated Company against fluctuations in
interest rates.
"Interface" shall mean Interface, Inc., a Georgia corpo-
ration, its successors and permitted assigns.
"Interface SPC" shall mean Interface Securitization
Corporation, a Delaware corporation, the Consolidated Company organized
as a special purpose corporation (i) to acquire accounts receivable from
other Consolidated Companies pursuant to the Receivables Transfer
Agreements, (ii) to sell such accounts receivable (or undivided ownership
interests therein) to SPARCC or CIBC pursuant to the Receivables Sale
Agreements, and (iii) under certain circumstances, to sell such accounts
receivable (or undivided ownership interests therein) to the Bank
Purchasers pursuant to the Receivables Backup Purchase Agreements, and
such Consolidated Company's successors and permitted assigns.
"Interface Control Debt" shall mean, at any time, debt of
Interface for borrowed money in an aggregate principal amount outstanding
at such time in excess of $10,000,000 which is subject to Change in
Control Provisions, excluding debt of Interface arising under this
Agreement or any Guaranty or Security Document of Interface delivered
pursuant to this Agreement or the Credit Agreement.
"Investment" shall mean, when used with respect to any
Person, any direct or indirect advance, loan or other extension of
credit (other than the creation of receivables in the ordinary course of
- 13 -<PAGE>
business) or capital contribution by such Person (by means of transfers
of property to others or payments for property or services for the
account or use of others, or otherwise) to any Person, or any direct or
indirect purchase or other acquisition by such Person of, or of a
beneficial interest in, capital stock, partnership interests, bonds,
notes, debentures or other securities issued by any other Person.
"Lender" or "Lenders" shall mean STBA, FNBC, the other
banks and lending institutions listed on the signature pages hereof, and
each assignee thereof, if any, pursuant to Section 10.06(c).
"Lending Office" shall mean for each Lender the office
such Lender may designate in writing from time to time to Interface and
the Co-Agents with respect to each Type of Loan.
"Letter of Credit Agreement" shall mean the Amended and
Restated Letter of Credit Agreement dated as of June 25, 1997, among
Interface, Interface Interior Fabrics, Inc. (formerly Guilford of Maine,
Inc.), Interface Flooring Systems, Inc., Bentley, Prince Street, Pandel,
Inc., Interface Research Corporation, Rockland React-Rite, Inc.,
Interface Architectural Resources, Inc. (formerly C-Tec, Inc.), SunTrust
Bank, Atlanta, as L/C Issuer, Domestic Agent, and Collateral Agent, and
the Domestic Syndicated Lenders (as defined in the Credit Agreement), as
the same may hereafter be further amended, restated or supplemented from
time to time.
"Leverage Ratio" shall mean the ratio, expressed as a
percentage, of Funded Debt to Total Capitalization for the Consolidated
Companies.
"LIBOR" shall mean, for any applicable Interest Period
with respect to Eurodollar Advances, the offered rate for deposits in
Dollars, for a period comparable to the Interest Period and in an amount
comparable to the Administrative Agent's portion of such Advances,
appearing on Telerate Page 3750 as of 11:00 A.M. (London, England time)
on the day that is two Business Days prior to the first day of the
Interest Period. If two or more of such rates appear on the Telerate
Page 3750, the rate shall be the arithmetic mean of such rates. If the
foregoing rate is unavailable from the Telerate Page 3750 for any reason,
then such rate shall be determined by the Administrative Agent from the
Reuters Screen LIBO Page or, if such rate is also unavailable on such
service, then on any other interest rate reporting service of recognized
standing designated in writing by the Administrative Agent to Interface
and the other Lenders, rounded, if necessary, to the next higher 1/16 of
1.0%, if the rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest,
lien, charge, hypothecation, assignment, deposit arrangement, title
retention, preferential right, trust or other arrangement having the
practical effect of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease
or other title retention agreement.
"Margin Regulations" shall mean Regulation G,
Regulation T, Regulation U and Regulation X of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to
time.
"Material Company" shall mean (i) Interface, (ii) each
Material Subsidiary, and (iii) each joint venture, general partnership,
association, or other business entity in which one or more of the
Consolidated Companies is a general partner, party, or member, and as to
which such Consolidated Company or Companies has become liable, either by
- 14 -<PAGE>
agreement, by operation of law, or otherwise, for obligations and
liabilities thereof in an aggregate amount greater than $10,000,000.
"Material Subsidiary" shall mean (i) each Credit Party
other than Interface, (ii) each other Consolidated Company listed in the
definition of the term "Pledged Stock" in this Section 1.01, but
excluding Guilford of Maine (Canada), Inc., Interface Heuga Singapore Pte
Ltd., Interface Heuga Hong Kong Ltd., and Interface Heuga Australia Pty
Ltd., and (iii) each other Subsidiary of Interface, now existing or
hereafter established or acquired, that at any time prior to the Final
Maturity Date, has or acquires total assets in excess of $10,000,000, or
that holds any assets material to the operations or business of another
Material Subsidiary (including, without limitation, each of Guilford of
Maine (U.K.) Ltd., Guilford of Maine (Canada), Inc., Interface Heuga
Singapore Pte Ltd., Interface Heuga Hong Kong Ltd., and Interface Heuga
Australia Pty Ltd., at such time, if any, as any of them acquires total
assets in excess of $10,000,000 or holds such material assets).
"Materially Adverse Effect" shall mean any materially
adverse change in (i) the business, results of operations, financial
condition, assets or prospects of the Consolidated Companies, taken as a
whole, or (ii) the ability of Interface to perform its respective
obligations under the Credit Documents.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any Asset Sale,
all cash, including (i) cash receivables (when received) by way of
deferred payment pursuant to a promissory note, a receivable or otherwise
(other than interest payable thereon), and (ii) with respect to Asset
Sales resulting from the loss, damage, destruction or taking of property,
the proceeds of insurance settlements and condemnation awards (other than
the portion of the proceeds of such settlements and such awards that are
used to repair, replace, improve or restore the item of property in
respect of which such settlement or award was paid provided that the re-
cipient of such proceeds enters into a binding contractual obligation to
effect such repair, replacement, improvement or restoration within
eighteen (18) months of such loss, damage or destruction and completes
such repair, replacement, improvement or restoration within thirty-six
(36) months of such loss, damage, destruction or taking) as and when
received in cash, in either case, received by any Consolidated Company as
a result of or in connection with such transaction, net of reasonable
sale expenses, fees and commissions incurred, and taxes paid or expected
to be payable within the succeeding 36-month period in connection
therewith, and net of any payment required to be made with respect to the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Term Loans) secured by a Lien (to the
extent permitted by Section 7.02) upon the asset sold in such Asset Sale.
"1996 Reorganization Credit Parties" shall mean,
collectively, Guilford of Maine, Inc., a Nevada corporation, Guilford of
Maine Finishing Services, Inc., a Nevada corporation, Guilford of Maine
Decorative Fabrics, Inc., a Nevada corporation, Guilford of Maine
Marketing Co., a Nevada corporation, Intek Marketing Co., a Nevada
corporation, Interface Holding Company, a Nevada corporation, Interface
Americas, Inc., a Georgia corporation, Interface Americas Services, Inc.,
a Georgia corporation, Interface Specialty Resources, Inc., a Nevada
corporation, Re:Source Americas Enterprises, Inc., a Georgia corporation,
Interface Royalty Company, a Nevada corporation, Interface Licensing
Company, a Nevada corporation, Prince Street Royalty Company, a Nevada
- 15 -<PAGE>
corporation, Bentley Royalty Company, a Nevada corporation,
Superior/Reiser Flooring Resources, Inc., a Texas corporation, Quaker
City International, Inc., a Pennsylvania corporation, Commercial Flooring
Systems, Inc., a Pennsylvania corporation, Congress Flooring Corp., a
Massachusetts corporation, and their respective successors and permitted
assigns.
"1996 Reorganization Transactions" shall mean those
transactions more particularly described on Schedule 1.01 attached hereto
and by this reference made a part hereof.
"Notes" shall mean, collectively, the Term Notes.
"Notice of Term Loan Conversion/Continuation" shall mean a
notice given by Interface to the Administrative Agent in respect of the
conversion or continuation of an outstanding portion of the Term Loans
pursuant to Section 2.01(c).
"Obligations" shall mean all amounts owing to any
Co-Agent, Lender, or Collateral Agent pursuant to the terms of this
Agreement or any other Credit Document, including without limitation, all
Term Loans (including all principal and interest payments due
thereunder), fees, expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Credit Parties, direct
or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corpora-
tion, or any successor thereto.
"Payment Office" shall mean the office specified as the
"Payment Office" for the Administrative Agent on the signature page of
the Administrative Agent, or such other location as to which the
Administrative Agent shall have given written notice to Interface and its
Co-Agent.
"Permitted Liens" shall mean those Liens expressly per-
mitted by Section 7.02.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, limited liability company, trust
or other entity, or any government or political subdivision or agency,
department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined
in Section 3(3) of ERISA), including, but not limited to, any defined
benefit pension plan, profit sharing plan, money purchase pension plan,
savings or thrift plan, stock bonus plan, employee stock ownership plan,
Multiemployer Plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical), hospitaliza-
tion, accident, sickness, disability, or life insurance benefits, but
shall exclude any Foreign Plan.
"Pledge Agreements" shall mean, collectively, that certain
Consolidated Amended and Restated Pledge and Security Agreement, that
certain Amended and Restated Agreement of Pledge, and that certain
Amended and Restated Deed of Pledge, executed in favor of the Collateral
Agent, substantially in the forms of Exhibits E-1 through E-3 and the
Pledge and Security Agreement executed by Interface Asia-Pacific, Inc.,
being amended by that certain 1997 Amendment to Pledge and Security
Agreement substantially in the form of Exhibit E-4, in each case
providing for the grant of first priority Liens on the Pledged Stock, as
- 16 -<PAGE>
the same may be further supplemented, amended or restated from time to
time.
"Pledged Stock" shall mean, collectively, (i) all issued
and outstanding capital stock, together with all warrants, stock options,
and other purchase and conversion rights with respect to such capital
stock, of each of Interface Interior Fabrics, Inc. (formerly 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, Intek, Inc., Toltec Fabrics, Inc., Interface Architectural
Resources, Inc. (formerly C-Tec, Inc.), Flooring Consultants, Inc.,
Lasher/White Carpet Company, Inc., B. Shehadi & Sons, Inc., the 1996
Reorganization Credit Parties, and all other Material Subsidiaries of
Interface organized in the United States, and (ii) 66% of all issued and
outstanding capital stock, together with 66% of all warrants, stock
options, and other purchase and conversion rights with respect to such
capital stock, of Europe Limited, Interface Europe B.V., Interface Heuga
Singapore Pte Ltd., Guilford of Maine (Canada), Inc., Interface Flooring
Systems (Canada), Inc., Interface Heuga Hong Kong Ltd., Interface Heuga
Australia Pty Limited, and all other Material Subsidiaries that are
Foreign Subsidiaries directly owned by Interface and/or one or more other
Subsidiaries organized in the United States.
"Prince Street" shall mean Prince Street Technologies,
Ltd., a Georgia corporation.
"Prince Street Acquisition" shall mean the acquisition by
Interface of Prince Street through the consummation of the transactions
described in the Prince Street Acquisition Agreement.
"Prince Street Acquisition Agreement" shall mean the
Acquisition Agreement dated as of December 3, 1993, among Interface,
Robert S. Weiner, Randall J. Hatch, Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton Corp., Prince Street Holding Company,
Steven C. Andrade, and Robert D. Williams, as amended.
"Pro Rata Share" shall mean, with respect to the Term Loan
Commitments of each Lender and each Loan to be made by and each payment
(including, without limitation, any payment of principal,, interest or
fees) to be made to each such Lender, the percentage designated as such
Lender's Pro Rata Share of such Term Loan Commitments, such Term Loans or
such payments, as applicable, set forth under the name of such Lender on
the respective signature page for such Lender, in each case as such Pro
Rata Share may change from time to time as a result of assignments,
amendments, or reductions made pursuant to this Agreement.
"Receivables Backup Purchase Agreements" shall mean the
agreements among Interface SPC, as seller, Interface, as collection
agent, and the Bank Purchasers, as purchasers, providing for the sale by
Interface SPC, and the purchase by the Bank Purchasers, of accounts
receivable (or undivided ownership interests therein) originated by
certain of the Consolidated Companies, as in effect on December 31, 1996,
and as the same may be amended, restated or supplemented from time to
time.
"Receivables Sale Agreements" shall mean the agreements
among Interface SPC, as seller, Interface, as collection agent, SPARCC,
as purchaser, and CIBC, as servicing agent, providing for the sale by
Interface SPC, and the purchase by SPARCC, of accounts receivable (or
undivided ownership interests therein) originated by certain of the
Consolidated Companies.
- 17 -<PAGE>
"Receivables Subordinated Notes" shall mean any and all
subordinated notes executed by Interface SPC from time to time in favor
of Interface and evidencing advances made from time to time by Interface
to Interface SPC in connection with, and pursuant to the terms of, the
Accounts Receivable Facilities, provided that, the aggregate outstanding
principal balance of such notes shall not at any time exceed $40,000,000.
"Receivables Transfer Agreements" shall mean, col-
lectively, the agreement(s) between certain of the Consolidated Compa-
nies, as originators, and Interface SPC, as purchaser, providing for the
sale by such Consolidated Companies, and the purchase by Interface SPC,
of accounts receivable originated by such Consolidated Companies.
"Redeemable Capital Stock" shall mean any shares of any
class or series of capital stock that, either by the terms thereof, by
the terms of any security into which it is convertible or exchangeable,
or by contract or otherwise, is or upon the happening of an event or
passage of time would be, required to be redeemed prior to the Final
Maturity Date or is redeemable at the option of the holder thereof at any
time prior to the Final Maturity Date, or is convertible into or
exchangeable for debt securities at any time prior to the Final Maturity
Date.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in effect
from time to time.
"Required Lenders" shall mean at any time Lenders holding
at least 66-2/3% of the then aggregate amount of the Term Loans.
"Requirement of Law" for any person shall mean the ar-
ticles or certificate of incorporation and bylaws or other organizational
or governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Reuters Screen" shall mean, when used in connection with
any designated page and LIBOR, the display page so designated on the
Reuter Monitor Money Rates Service (or such other page as may replace
that page on that service for the purpose of displaying rates comparable
to LIBOR).
"SPARCC" shall mean Special Purpose Accounts Receivable
Cooperative Corporation, its successors and permitted assigns.
"Security Documents" shall mean, collectively, the Guar-
anty Agreements, the Pledge Agreements, and each other guaranty
agreement, mortgage, deed of trust, security agreement, pledge agreement,
or other security or collateral document guaranteeing or securing the
Obligations, as the same may be amended, restated, or supplemented from
time to time.
"Senior Funded Debt" shall mean Funded Debt minus Subor-
dinated Debt.
"Senior Subordinated Notes" shall mean, collectively, the
unsecured Senior Subordinated Notes Due 2005 issued by Interface, and
guaranteed by certain Subsidiaries of Interface, in the aggregate
principal amount of $125,000,000 (plus the aggregate principal amount, if
- 18 -<PAGE>
any, of such Senior Subordinated Notes issued pursuant to the
underwriters' over-allotment option up to a total amount of $18,750,000),
as more particularly described on the Senior Subordinated Notes
Description, together with any and all "Exchange Notes" (as defined in
the Senior Subordinated Notes Description) issued to holders of such
Senior Subordinated Notes in exchange therefor.
"Senior Subordinated Notes Description" shall mean the
description of the Senior Subordinated Notes as set forth in Exhibit Y
attached hereto and by this reference made a part hereof.
"Senior Subordinated Notes Guarantor" shall mean each
Subsidiary of Interface that is a "Guarantor" with respect to the Senior
Subordinated Notes as provided in the Senior Subordinated Notes
Indenture.
"Senior Subordinated Notes Indenture" shall mean the
Indenture dated as of November 15, 1995, by and among Interface, Bentley,
Guilford (Delaware), Inc., Guilford of Maine, Inc., Interface Asia-
Pacific, Inc., Interface Europe, Inc., Interface Flooring Systems, Inc.,
Interface Research Corporation, Pandel, Inc., Prince Street, Rockland
React-Rite, Inc., and First Union National Bank of Georgia, pursuant to
which Interface issued its Senior Subordinated Notes, as the same has
been or may hereafter be amended or supplemented from time to time.
"Shareholders' Equity" shall mean, with respect to any
Person as at any date of determination, shareholders' equity of such
Person determined on a consolidated basis in conformity with GAAP.
"Significant Subsidiary" shall have the same meaning as in
Rule 1.02(v) of Regulation S-X under the Securities Act of 1933, as
amended.
"Subordinated Debt" shall mean (i) Indebtedness
outstanding pursuant to the Senior Subordinated Notes, and (ii) other
Indebtedness of Interface subordinated to all obligations of Interface or
any other Credit Party arising under this Agreement, the Term Notes, and
the Guaranty Agreements on terms and conditions satisfactory in all
respects to the Co-Agents and the Required Lenders, including without
limitation, with respect to interest rates, payment terms, maturities,
amortization schedules, covenants, defaults, remedies, and subordination
provisions, as evidenced by the written approval of the Co-Agents and the
Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships,
joint ventures, and associations) regardless of its jurisdiction of
organization or formation, at least a majority of the total combined
voting power of all classes of voting stock or other ownership interests
of which shall, at the time as of which any determination is being made,
be owned by such Person, either directly or indirectly through one or
more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of 1986,
as amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other
charges of whatever nature, including without limitation, income,
receipts, excise, property, sales, transfer, license, payroll,
withholding, social security and franchise taxes now or hereafter imposed
- 19 -<PAGE>
or levied by the United States, or any state, local or foreign government
or by any department, agency or other political subdivision or taxing
authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and the Certificate of Deposit Rate or LIBOR, the display
page so designated on the Dow Jones Telerate Service (or such other page
as may replace that page on that service for the purpose of displaying
rates comparable to the Certificate of Deposit Rate or LIBOR).
"Term Loan Commitment" shall mean, at any time for any
Lender, the amount of such commitment set forth opposite such Lender's
name on the signature pages hereof, as the same may be increased or
decreased from time to time as a result of any repayment of the Term
Loans, any assignment thereof pursuant to Section 10.06, or any amendment
thereof pursuant to Section 10.02.
"Term Loans" shall mean, collectively, the term loans in
the aggregate principal amount of $75,000,000 to be made to Interface by
the Lenders on the Closing Date pursuant to Section 2.01(a).
"Term Notes" shall mean, collectively, the promissory
notes evidencing the Term Loans substantially in the form of Exhibit A
and duly completed in accordance with the terms hereof.
"Total Capitalization" shall mean the sum of Funded Debt
and Consolidated Net Worth for the Consolidated Companies.
"Type" of Borrowing shall mean a Borrowing consisting of
Base Rate Advances, CD Rate Advances, and Eurodollar Advances.
Section 1.02. Accounting Terms and Determination. Un-
less otherwise defined or specified herein, all accounting terms shall be
construed herein, all accounting determinations hereunder shall be made,
all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained in accordance
with, GAAP, except that financial records of Foreign Subsidiaries may be
maintained in accordance with generally accepted accounting principles in
effect from time to time in the jurisdiction of organization of such
Foreign Subsidiary; provided, however, that compliance with the financial
covenants and calculations set forth in Section 6.08, Article VII, and
elsewhere herein, and in the definitions used in such covenants and
calculations, shall be calculated, made and applied in accordance with
GAAP and such generally accepted accounting principles in such foreign
jurisdictions, as the case may be, as in effect on the date of this
Agreement applied on a basis consistent with the preparation of the
financial statements referred to in Section 5.14 unless and until the
parties enter into an agreement with respect thereto in accordance with
Section 10.13; and provided, further, that for purposes of such financial
covenants and calculations, the Convertible Preferred Stock shall be
considered as capital stock of Interface and not as Funded Debt.
Section 1.03. Other Definitional Terms. The words
"hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section, Schedule,
Exhibit and like references are to this Agreement unless otherwise
specified.
Section 1.04. Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
- 20 -<PAGE>
ARTICLE II.
TERM LOANS
Section 2.01. Amount of Term Loans; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein
set forth, each Lender agrees to make on the Closing Date, a Term Loan to
Interface in an amount equal to its Term Loan Commitment, such Term Loans
to be repaid as set forth in Section 2.02(b). Interface shall not be
entitled to reborrow any amounts repaid with respect to the Term Loans.
(b) The Term Loans shall, at the option of Interface, be
made or continued as, or converted into, part of one or more Borrowings
that shall consist entirely of Base Rate Advances, CD Rate Advances, or
Eurodollar Advances. The aggregate principal amount of each Borrowing of
Term Loans consisting of CD Rate Advances or Eurodollar Advances shall be
not less than $1,000,000 or a greater integral multiple of $100,000, and
the aggregate principal amount of each Borrowing of Term Loans consisting
of Base Rate Advances shall not be less than $300,000 or a greater
integral multiple of $100,000. At no time shall the number of Borrowings
outstanding under the Term Loans exceed eight in either case; provided
that, for the purpose of determining the number of Borrowings outstanding
and the minimum amount for Borrowings resulting from conversions or
continuations, all Borrowings under the Term Loans comprised of Base Rate
Advances shall be considered in each case as one Borrowing.
(c) Whenever Interface desires to convert all or a
portion of an outstanding Borrowing constituting a portion of the Term
Loans, which Borrowing consists of Base Rate Advances, CD Rate Advances
or Eurodollar Advances, into one or more Borrowings consisting of
Advances of another Type, or to continue outstanding a Borrowing
consisting of CD Rate Advances or Eurodollar Advances for a new Interest
Period, it shall give the Administrative Agent at least two (2) Business
Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing being converted into or continued as CD Rate
Advances, and at least three (3) Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing to be
converted into or continued as Eurodollar Advances. Such notice (a
"Notice of Term Loan Conversion/Continuation") shall be given prior to
11:00 a.m. (Eastern time) on the date specified. Each such Notice of
Term Loan Conversion/Continuation shall be irrevocable and shall specify
the aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation, whether the
Advances are being converted into or continued as CD Rate Advances or
Eurodollar Advances and (in the case of Fixed Rate Advances) the Interest
Period applicable thereto. If, upon the expiration of any Interest
Period in respect of any Borrowing, Interface shall have failed, or
pursuant to the following sentence be unable, to deliver the Notice of
Term Loan Conversion/Continuation, Interface shall be deemed to have
elected to convert or continue such Borrowing to a Borrowing consisting
of Base Rate Advances. So long as any Default or Event of Default shall
have occurred and be continuing, no Borrowing may be converted into or
continued as (upon expiration of the current Interest Period) Fixed Rate
Advances. No conversion of any Borrowing of Fixed Rate Advances shall be
permitted except on the last day of the Interest Period in respect
thereof.
(d) The proceeds from the Term Loans shall be used (i) to
repay outstanding "Domestic Revolving Loans" under the Credit Agreement
by an aggregate principal amount equal to $50,000,000, and (ii) to prepay
that portion of the outstanding "Term Loans" under the Credit Agreement
- 21 -<PAGE>
in an aggregate principal amount equal to $25,000,000 that were otherwise
scheduled to be repaid on December 31, 2001.
Section 2.02. Term Notes; Repayment of Principal.
(a) Interface's obligations to pay the principal of, and
interest on, the Term Loans to each Lender shall be evidenced by the
records of the Administrative Agent and such Lender and by the respective
Term Note payable to such Lender (or the assignor of such Lender)
completed in conformity with this Agreement.
(b) Interface shall repay all outstanding Term Loans in
full on the Final Maturity Date.
Section 2.03. Mandatory Prepayments.
(a) No mandatory prepayment shall be required pursuant to
this Section 2.03(a) until the aggregate amount of Asset Sales occurring
after October 2, 1994 exceeds $10,000,000 (based on the Asset Values
thereof, but excluding in the foregoing computation (i) Asset Sales
resulting from loss, damage, destruction, or taking where the proceeds
thereof are utilized so as to be excluded from the definition of Net
Proceeds, and (ii) Asset Sales occurring as a part of any sale and
leaseback transactions permitted pursuant to Section 7.06). Whenever
such Asset Values shall have equaled or exceeded such amount, the
following prepayments shall be required to be made:
(i) Within ten (10) Business Days after each
date on which any Consolidated Company receives any
Net Proceeds as a result of or in connection with an
Asset Sale by any Consolidated Company, the Term
Loans outstanding under Section 2.01 and the Credit
Agreement Term Loans shall be prepaid on a pro rata
basis by an amount equal to forty percent (40%) of
such Net Proceeds (such amount being subject to
adjustment pursuant to paragraph (c) of this Section
2.03) plus interest accrued and unpaid on the amount
of such prepayment. If immediately prior to any
Asset Sale the aggregate amount of prior Asset Sales
(determined as aforesaid) is less than $10,000,000,
but such Asset Sale causes the $10,000,000 threshold
amount to be exceeded, then forty percent (40%) of a
pro rata portion of the Net Proceeds of such Asset
Sale, based upon the ratio of the amount of the Asset
Value of such Asset Sale in excess of the $10,000,000
threshold to the total Asset Value of such Asset
Sale, shall be applied as set forth in the preceding
sentence; and
(ii) If, within fourteen (14) months following
an Asset Sale described in the preceding clause (i),
the remaining sixty percent (60%) of such Net
Proceeds, or pro rata portion thereof, has neither
been (x) invested in properties and assets that
replace the properties and assets that were the
subject of such Asset Sale, or in properties and
assets that will be used in the businesses of
Interface and its Subsidiaries existing on
November 1, 1995 or in businesses reasonably related
thereto, or (y) used to prepay the Term Loans
outstanding under Section 2.01 and the Credit
Agreement Term Loans, then Interface shall promptly
prepay any and all such remaining amounts (such
- 22 -<PAGE>
amounts being subject to adjustment pursuant to
paragraph (c) of this Section 2.03) not so invested
or previously prepaid and such amounts shall be
applied as provided in this Section 2.03(a).
Notwithstanding the foregoing, if all or substantially all of the assets
of any Senior Subordinated Notes Guarantor that is a Significant
Subsidiary, or all of the capital stock of any Senior Subordinated Notes
Guarantor that is a Significant Subsidiary, is sold (including by
issuance or otherwise) by Interface or any of its Subsidiaries to any
Person other than Interface or its wholly owned Subsidiaries, then the
entire amount of the Net Proceeds from such transaction shall immediately
be used to prepay the Term Loans and the Credit Agreement Term Loans on a
pro rata basis.
All such prepayments under this Section 2.03(a) shall be
applied in each case against all remaining scheduled amortization
payments on a pro rata basis, without prejudice, however, to the
provisions of Section 2.03(c).
(b) On the date Interface delivers its annual financial
statements pursuant to Section 6.07(a), but in no event later than the
date that occurs one hundred twenty (120) days after the last day of each
fiscal year of Interface, the Term Loans outstanding under Section 2.01
and the Credit Agreement Term Loans shall be prepaid on a pro rata basis
by an amount equal to 25% of the Excess Cash Flow, if any, for such
fiscal year (such amount being subject to adjustment pursuant to
paragraph (c) of this Section 2.03) plus interest accrued and unpaid on
the amount of such prepayment. Such prepayment shall be applied in each
case to principal installment payments of the Term Loans and the Credit
Agreement Term Loans in the inverse order of their respective maturities,
without prejudice, however, to the provisions of Section 2.03(c).
(c) Notwithstanding the provisions of paragraphs (a) and
(b) of this Section 2.03, (i) no mandatory prepayment shall be required
to be made under paragraph (a) or (b) of this Section 2.03 if the amount
under paragraph (a) or (b) (including any amount required to be prepaid
in respect of the Credit Agreement Term Loans) is less than $100,000 in
any instance, and (ii) mandatory prepayment amounts otherwise required
under said paragraphs (a) and (b) (including any amount required to be
prepaid in respect of the Credit Agreement Term Loans) shall be rounded
to nearest multiple of $100,000 (such that, for example, if the portion
of Net Proceeds required to be prepaid pursuant to paragraph (a) is
$250,000 or more, but less than $350,000, the mandatory prepayment amount
under this Section 2.03 shall equal $300,000 plus interest accrued and
unpaid on such amount).
(d) Each mandatory prepayment of Term Loans and Credit
Agreement Term Loans pursuant to this Section 2.03 shall be applied on a
pro rata basis first to Base Rate Advances outstanding under each such
series of Term Loans to the full extent thereof before application to
Fixed Rate Advances outstanding under such series; provided, however,
that, so long as no Default or Event of Default has occurred and is con-
tinuing, in lieu of application of such prepayment to Fixed Rate Advances
prior to the expiration of the respective Interest Periods with respect
thereto, Interface, at its option, may execute an Escrow Letter with
respect to such prepayments and deposit with the Collateral Agent funds
equal to such prepayments for application in accordance with the terms of
such Escrow Letter.
Section 2.04. Designated Senior Indebtedness. Interface
(i) acknowledges and agrees that the Term Loans and all other Obligations
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from time to time owing under this Agreement and the other Credit
Documents are and shall constitute "Senior Indebtedness" for all purposes
under the Senior Subordinated Notes Indenture, and (ii) hereby designates
the Term Loans and all such other Obligations as "Designated Senior
Indebtedness" for all purposes under the Senior Subordinated Notes
Indenture.
ARTICLE III.
GENERAL LOAN TERMS
Section 3.01. Funding Notices. Without in any way
limiting Interface's obligation to confirm in writing any telephonic
notice, each Co-Agent may act without liability upon the basis of
telephonic notice believed by such Co-Agent in good faith to be from
Interface prior to receipt of written confirmation. In each such case,
Interface hereby waives the right to dispute such Co-Agent's record of
the terms of such telephonic notice.
Section 3.02. Disbursement of Funds.
(a) Unless the Administrative Agent shall have been
notified by any Lender prior to the date of a Borrowing that such Lender
does not intend to make available to the Administrative Agent such
Lender's portion of the Borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made such amount
available to such Administrative Agent on such date and such
Administrative Agent may make available to Interface a corresponding
amount. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender on the date of Borrowing, the
Administrative Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest at the customary
rate set by the Administrative Agent for the correction of errors among
banks. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify Interface, and Interface shall immediately pay such
corresponding amount to the Administrative Agent together with interest
at the rate specified for the Borrowing which includes such amount paid.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to fund its Term Loan Commitment hereunder or to prejudice any
rights which Interface may have against any Lender as a result of any de-
fault by such Lender hereunder.
(b) All Borrowings under the Term Loans shall be loaned
by those Lenders participating in the Facility on the basis of their Pro
Rata Share of the Term Loan Commitments. No Lender shall be responsible
for any default by any other Lender in its obligations hereunder, and
each Lender shall be obligated to make the Term Loans provided to be made
by it hereunder, regardless of the failure of any other Lender to fund
its Term Loan Commitments hereunder.
Section 3.03. Interest.
(a) Interface agrees to pay interest in respect of all
unpaid principal amounts of the Term Loans from the respective dates such
principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum equal to the rates
indicated below as applicable to outstanding Advances in accordance with
the terms hereof:
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(i) For a Base Rate Advance--The Base Rate in effect
from time to time;
(ii) For a CD Rate Advance--The relevant Fixed CD
Rate plus the Applicable Margin; and
(iii) For a Eurodollar Advance--The relevant Adjusted
LIBO Rate plus the Applicable Margin.
(b)Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Term Loans and all other
overdue amounts owing hereunder, shall bear interest from each date that such
amounts are overdue:
(i) in the case of overdue principal and interest
with respect to all Term Loans outstanding as Eurodollar
Advances or CD Rate Advances, at the rate otherwise
applicable for the then-current Interest Period plus an
additional one and one-half percent (1 1/2%) per annum;
thereafter at the rate in effect for Base Rate Advances
pursuant to Section 3.03(a)(i) plus an additional one and
one-half percent (1 1/2%) per annum; and
(ii) in the case of overdue principal and interest
with respect to all Term Loans outstanding as Base Rate
Advances and all other Obligations hereunder (other than
Term Loans), at a rate equal to the applicable Base Rate
plus an additional one and one-half percent (1 1/2%) per
annum;
provided that no Term Loan shall bear interest after maturity (whether by
acceleration, notice of prepayment or otherwise) at a rate per annum less
than one and one-half percent (1 1/2%) per annum in excess of the rate of
interest applicable thereto at maturity.
(c) Interest on each Term Loan shall accrue from and
including the date of such Term Loan to but excluding the date of any
repayment thereof. Interest on all outstanding Base Rate Advances shall
be payable quarterly in arrears on the last calendar day of each fiscal
quarter of Interface in each year. Interest on all outstanding Fixed
Rate Advances shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of Fixed Rate Advances having an
Interest Period in excess of 90 days (in the case of CD Rate Advances, if
quoted on the basis of 180 days) or in excess of three months (in the
case of Eurodollar Advances, if quoted on the basis of six months), on
each day which occurs every 90 days or 3 months, as the case may be,
after the initial date of such Interest Period. Interest on all Term
Loans shall be payable on any conversion of any Advance comprising such
Term Loans into an Advance of another Type, prepayment (on the amount
prepaid), at maturity (whether by acceleration, notice of prepayment or
otherwise) and, after maturity, on demand.
(d) The Administrative Agent, upon determining the Fixed
CD Rate or Adjusted LIBO Rate for any Interest Period, shall promptly
notify by telephone (confirmed in writing) or in writing Interface and
the other Lenders. Any such determination shall, absent manifest error,
be final, conclusive and binding for all purposes.
Section 3.04. Interest Periods. In connection with the
making or continuation of, or conversion into, each Borrowing of Fixed
Rate Advances, Interface shall select an interest period (each an
- 25 -<PAGE>
"Interest Period") to be applicable to such Advances, which Interest
Period shall (x) in the case of CD Rate Advances, be either a 30, 60, 90
or 180 day period or (y) in the case of Eurodollar Advances, be either a
1, 2, 3 or 6 month period; provided that:
(i) The initial Interest Period for any Borrowing
consisting of any such Advance shall commence on the date
of such Borrowing (including the date of any conversion
from a Borrowing consisting of an Advance of another Type)
and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the
next preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day, provided
that if any Interest Period in respect of a Eurodollar
Advance would otherwise expire on a day that is not a
Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;
(iii) Any Interest Period in respect of a Eurodollar
Advance which begins on a day for which there is no nu-
merically corresponding day in the calendar month at the
end of such Interest Period shall, subject to part (iv)
below, expire on the last Business Day of such calendar
month;
(iv) No Interest Period shall extend beyond any date
upon which any principal payment is due with respect to
the Term Loans, unless the aggregate principal amount of
Term Loans that are not Fixed Rate Advances, or that have
Interest Periods which will expire on or before the date
of the respective payment or prepayment, is equal to or in
excess of the amount of any such principal payments or
prepayments to be made;
(v) The Interest Period for a Fixed Rate Advance
which is converted pursuant to Section 3.09(b) shall
commence on the date of such conversion and shall expire
on the date on which the Interest Periods for the Fixed
Rate Advances of the other Lenders which were not con-
verted expires; and
(vi) No Interest Period with respect to the Term
Loans shall extend beyond the Final Maturity Date.
Section 3.05. Fees. Interface shall pay to the
Administrative Agent and the Syndication Agent a quarterly administrative
fee, payable in advance in the respective amounts previously agreed in
writing by Interface.
Section 3.06. Voluntary Prepayments of Borrowings.
(a) Interface may, at its option, prepay Borrowings
consisting of Base Rate Advances, at any time in whole, or from time to
time in part, in amounts aggregating $250,000 or any greater integral
multiple of $1000, by paying the principal amount to be prepaid together
with interest accrued and unpaid thereon to the date of prepayment.
Those Borrowings consisting of Fixed Rate Advances may be prepaid, at
Interface's option, in whole, or from time to time in part, in the
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respective minimum amounts and multiples set forth in Section 2.01(b), as
applicable to the Type of Advance, by paying the principal amount to be
prepaid, together with interest accrued and unpaid thereon to the date of
prepayment, and all compensation payments pursuant to Section 3.12 if
such prepayment is made on a date other than the last day of an Interest
Period applicable thereto. Each such optional prepayment shall be
applied in accordance with Section 3.06(c) below.
(b) Interface shall give written notice (or telephonic
notice confirmed in writing) to the Administrative Agent of any intended
prepayment pursuant to Section 3.06(a), (i) not less than one Business
Day prior to any prepayment of Base Rate Advances, (ii) not less than two
Business Days prior to any prepayment of CD Rate Advances, and (iii) not
less than three Business Days prior to any prepayment of Eurodollar
Advances. Such notice, once given, shall be irrevocable. Upon receipt
of such notice of prepayment, the Administrative Agent shall promptly
notify each Lender whose Advance constitutes a portion of such Borrowing
of the contents of such notice and of such Lender's share of such
prepayment.
(c) Interface may designate the Types of Advances and the
specific Borrowings that are to be prepaid as part of any prepayment
pursuant to Section 3.06(b), provided that (i) if any prepayment of Fixed
Rate Advances made pursuant to a single Borrowing shall reduce the
outstanding Advances made pursuant to such Borrowing to an amount less
than $1,000,000, such Borrowing shall immediately be converted into Base
Rate Advances; and (ii) each prepayment made pursuant to a single
Borrowing shall be applied pro rata among the Term Loans comprising such
Borrowing. In the absence of a designation by Interface, the
Administrative Agent shall, subject to the foregoing, make such
designation in its sole discretion. All voluntary prepayments shall be
applied to the payment of interest before application to principal and
shall be applied against scheduled amortization payments in the inverse
order of maturity.
Section 3.07. Payments, etc.
(a) Except as otherwise specifically provided herein, all
payments under this Agreement and the other Credit Documents shall be
made without defense, set-off or counterclaim to the Administrative Agent
not later than 11:00 A.M. (Eastern time) on the date when due and shall
be made in Dollars in immediately available funds at its Payment Office.
(b) (i) Any and all payments by Interface hereunder or
under the Term Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender, taxes imposed on or
measured by its net income, and franchise taxes and branch profit taxes
imposed on it (A) by the jurisdiction under the laws of which such Lender
is organized or any political subdivision thereof and, in the case of
each Lender, taxes imposed on or measured by its net income, and
franchise taxes and branch profit taxes imposed on it, by the ju-
risdiction of such Lender's appropriate Lending Office or any political
subdivision thereof, and (B) by a jurisdiction in which any payments are
to be made by Interface hereunder, other than the United States of
America or any political subdivision of any thereof, and that would not
have been imposed but for the existence of a connection between such
Lender and the jurisdiction imposing such taxes (other than a connection
arising as a result of this Agreement or the transactions contemplated by
this Agreement), except in the case of taxes described in this
clause (B), to the extent such taxes are imposed as a result of a change
- 27 -<PAGE>
in the law or regulations of any jurisdiction or any applicable treaty or
regulations or in the official interpretation of any such law, treaty or
regulations by any governmental authority charged with the interpretation
or administration thereof after the date of this Agreement (all such
excluded net income taxes, franchise taxes and branch profit taxes
collectively referred to as the "Excluded Taxes"; all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being collectively referred to in this Section 3.07(b) as "Taxes"). If
Interface shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Term Note to any Lender, (x)
the sum so payable shall be increased by such amount (the "Gross-up
Amount") as may be necessary so that after making all required deductions
(including deductions with respect to Taxes owed by such Lender on the
Gross-up Amount payable under this Section 3.07(b)(i)) such Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (y) Interface shall make such deductions, and (z)
Interface shall pay the full amount deducted to the relevant taxation au-
thority or other authority in accordance with applicable law.
(ii) Interface will indemnify each Lender for the full
amount of Taxes (together with any Taxes or Excluded Taxes owed by such
Lender applicable to the Gross-up Amount payable under clause (x) of
Section 3.07(b)(i) or on the indemnification payments made by Interface
under this Section 3.07(b)(ii), but without duplication thereof), and any
liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or such Excluded Taxes
were correctly or legally asserted, so as to compensate such Lender for
any loss, cost, expense or liability incurred as a consequence of any
such Taxes. Payment pursuant to such indemnification shall be made
within 10 Business Days from the date such Lender makes written demand
therefor.
(iii) Within 30 days after the date of Interface's payment
of Taxes, Interface will furnish to the relevant Lender, at its
appropriate Lending Office, the original or a certified copy of a receipt
evidencing payment thereof.
(iv) Each Lender that is a foreign Person (i.e., a Person
other than a United States Person as defined in the Internal Revenue Code
of 1986, as amended) hereby agrees that:
(A) it shall, prior to the time it becomes a Lender
hereunder, deliver to Interface:
(1) for each Lending Office located in the
United States of America, three (3) accurate and
complete signed originals of Internal Revenue Service
Form 4224 or any successor thereto ("Form 4224"),
and/or
(2) for each Lending Office located outside the
United States of America, three (3) accurate and com-
plete signed originals of Internal Revenue Service
Form 1001 or any successor thereto ("Form 1001");
in each case indicating that such Lender, on the date of
delivery thereof, is entitled to receive payments of
principal, interest and fees for the account of such
Lending Office under this Agreement and the Term Notes,
free from withholding of United States Federal income tax;
provided, that if the Form 4224 or Form 1001, as the case
may be, supplied by a Lender fails to establish a complete
exemption from United States withholding tax as of the
- 28 -<PAGE>
date such Lender becomes a Lender, such Lender shall,
within 15 days after a written request from Interface, de-
liver to Interface the forms or other documents necessary
to establish a complete exemption from United States
withholding tax as of such date;
(B) if at any time such Lender changes its Lending
Office or selects an additional Lending Office, it shall,
at the same time or reasonably promptly thereafter (but
only to the extent the forms previously delivered by it
hereunder are no longer effective) deliver to Interface in
replacement for the forms previously delivered by it
hereunder:
(1) for such changed or additional Applicable
Lending Office located in the United States of
America, three (3) accurate and complete signed
originals of Form 4224; or
(2) otherwise, three (3) accurate and complete
signed originals of Form 1001;
in each case indicating that such Lender is on the date of
delivery thereof entitled to receive payments of
principal, interest and fees for the account of such
changed or additional Lending Office under this Agreement
and the Term Notes, free from withholding of United States
Federal income tax.
(v) In addition to the documents to be furnished pursuant
to Section 3.07(b)(iv), each Lender shall, promptly upon the reasonable
written request of Interface to that effect, deliver to Interface such
other accurate and complete forms or similar documentation as such Lender
is legally able to provide and as may be required from time to time by
any applicable law, treaty, rule or regulation of any jurisdiction in
order to establish such Lender's tax status for withholding purposes or
as may otherwise be appropriate to eliminate or minimize any Taxes on
payments under this Agreement or the Term Notes. Each Lender furnishing
forms to Interface pursuant to the requirements of Section 3.07(b)(iv)
and this clause (v), shall furnish copies of such forms to the
Administrative Agent at the same time delivery of such forms is made to
Interface.
(vi) Interface shall not be required to pay any amounts
pursuant to Section 3.07(b)(i) or (ii) to any Lender for the account of
any Lending Office of such Lender in respect of any United States
withholding taxes payable hereunder (and Interface, if required by law to
do so, shall be entitled to withhold such amounts and pay such amounts to
the United States Government) if the obligation to pay such additional
amounts would not have arisen but for a failure by such Lender to comply
with its obligations under Section 3.07(b)(iv), and such Lender shall not
be entitled to exemption from deduction or withholding of United States
Federal income tax in respect of the payment of such sum by Interface
hereunder for the account of such Lending Office for, in each case, any
reason other than a change in United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of
any such law, treaty or regulations by any governmental authority charged
with the interpretation or administration thereof (whether or not having
the force of law) after the date such Lender became a Lender hereunder.
(vii) Within sixty (60) days of the written request of
Interface, each Lender shall execute and deliver such certificates, forms
- 29 -<PAGE>
or other documents, which can be reasonably furnished consistent with the
facts and which are reasonably necessary to assist in applying for
refunds of Taxes remitted hereunder.
(viii) Each Lender shall use reasonable efforts to avoid
or minimize any amounts which might otherwise be payable by Interface
pursuant to this Section 3.07(b), except to the extent that a Lender
determines that such efforts would be disadvantageous to such Lender, as
determined by such Lender and which determination, if made in good faith,
shall be binding and conclusive on all parties hereto.
(ix) To the extent that the payment of any Lender's Taxes
by Interface gives rise from time to time to a Tax Benefit (as
hereinafter defined) to such Lender in any jurisdiction other than the
jurisdiction which imposed such Taxes, such Lender shall pay to Interface
the amount of each such Tax Benefit so recognized or received. The
amount of each Tax Benefit and, therefore, payment to Interface will be
determined from time to time by the relevant Lender in its sole
discretion, which determination shall be binding and conclusive on all
parties hereto. Each such payment will be due and payable by such Lender
to Interface within a reasonable time after the filing of the income tax
return in which such Tax Benefit is recognized or, in the case of any tax
refund, after the refund is received; provided, however, if at any time
thereafter such Lender is required to rescind such Tax Benefit or such
Tax Benefit is otherwise disallowed or nullified, Interface shall
promptly, after notice thereof from such Lender, repay to Lender the
amount of such Tax Benefit previously paid to Interface and rescinded,
disallowed or nullified. For purposes of this section, "Tax Benefit"
shall mean the amount by which any Lender's income tax liability for the
taxable period in question is reduced below what would have been payable
had Interface not been required to pay the Lender's Taxes. In case of
any dispute with respect to the amount of any payment Interface shall
have no right to any offset or withholding of payments with respect to
future payments due to any Lender under this Agreement or the Term Notes.
(x) Without prejudice to the survival of any other agree-
ment of Interface hereunder, the agreements and obligations of Interface
and the Lenders contained in this Section 3.07(b) shall survive the
termination of this Agreement and the payment in full of the principal
of, premium, if any, interest, and fees hereunder and under the Term
Notes.
(e) Subject to Section 3.04(ii), whenever any payment to
be made hereunder or under any Term Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the applicable rate
during such extension.
(f) All computations of interest and fees hereunder and
under the Term Notes shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable
(to the extent computed on the basis of days elapsed). Interest on Base
Rate Advances shall be calculated based on the Base Rate from and
including the date of such Term Loan to but excluding the date of the
repayment or conversion thereof. Interest on Fixed Rate Advances shall
be calculated as to each Interest Period from and including the first day
thereof to but excluding the last day thereof. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be made
in good faith and, except for manifest error, shall be final, conclusive
and binding for all purposes.
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(g) Payment by Interface to the Administrative Agent in
accordance with the terms of this Agreement shall constitute payment to
the applicable Lenders under this Agreement.
Section 3.08. Interest Rate Not Ascertainable, etc. In
the event that the Administrative Agent shall have determined (which
determination shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all parties) that on any date
for determining the Adjusted LIBO Rate or the Fixed CD Rate for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or the United States
secondary certificate of deposit market, as the case may be, or the
Administrative Agent's position in such markets, adequate and fair means
do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Adjusted LIBO Rate or Fixed CD Rate, as
the case may be, then, and in any such event, the Administrative Agent
shall forthwith give notice (by telephone confirmed in writing) to
Interface and to the Lenders of such determination and a summary of the
basis for such determination. Until the Administrative Agent notifies
Interface that the circumstances giving rise to the suspension described
herein no longer exist, the obligations of the Lenders to make or permit
portions of the Term Loans to remain outstanding as CD Rate Advances or
Eurodollar Advances as the case may be, shall be suspended, and such
affected Advances shall bear the same interest as Base Rate Advances.
Section 3.09. Illegality.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties) at any
time that the making or continuance of any Fixed Rate Advance has become
unlawful by compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful), then, in any such event, the Lender shall give prompt
notice (by telephone confirmed in writing) to Interface and to the
Administrative Agent of such determination and a summary of the basis for
such determination (which notice the Administrative Agent shall promptly
transmit to the other Lenders).
(b) Upon the giving of the notice to Interface referred
to in subsection (a) above, (i) Interface's right to request and such
Lender's obligation to fund portions of CD Rate Advances or Eurodollar
Advances, as the case may be, shall be immediately suspended, and such
Lender shall make the Term Loan as part of the requested Borrowing
consisting of a CD Rate Advance or Eurodollar Advance, as the case may
be, as a Base Rate Advance, which Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing, and (ii) if the affected
Fixed Rate Advance is then outstanding, Interface shall immediately, or
if permitted by applicable law, no later than the date permitted thereby,
upon at least one Business Day's written notice to the Administrative
Agent and the affected Lender, convert the affected Lender's portion of
such Advance into a Term Loan of a different Type with an Interest Period
ending on the date on which the Interest Period applicable to the
affected Fixed Rate Advances expires, provided that if more than one
Lender is affected at any time, then all affected Lenders must be treated
the same pursuant to this Section 3.09(b).
Section 3.10. Increased Costs.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any change
- 31 -<PAGE>
by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (y) the compliance with any
guideline or request from any central bank or other governmental
authority or quasi-governmental authority exercising control over banks
or financial institutions generally (whether or not having the force of
law):
(i) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with
respect to its portion of a Fixed Rate Advance or its
obligation to fund a portion of a Fixed Rate Advance, or
the basis of taxation of payments to any Lender of the
principal of or interest on its portion of a Fixed Rate
Advance or its obligation to fund a portion of a Fixed
Rate Advance shall have changed (except for changes in the
tax on the overall net income of such Lender or its
applicable Lending Office imposed by the jurisdiction in
which such Lender's principal executive office or
applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit
extended by, any Lender's applicable Lending Office shall
be imposed or deemed applicable or any other condition
affecting its portion of a Fixed Rate Advance or its
obligation to fund a portion of a Fixed Rate Advance shall
be imposed on any Lender or its applicable Lending Office
or the London interbank market or the United States
secondary certificate of deposit market;
and as a result thereof there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining a portion of
a Fixed Rate Advance (except to the extent already included in the
determination of the applicable interest rate in effect for such portion
of the Fixed Rate Advance), or there shall be a reduction in the amount
received or receivable by such Lender or its applicable Lending Office,
then Interface shall from time to time (subject, in the case of certain
Taxes, to the applicable provisions of Section 3.07(b)), upon written
notice from and demand by such Lender on Interface (with a copy of such
notice and demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender, within five Business Days after the
date of such notice and demand, additional amounts sufficient to
indemnify such Lender against such increased cost. A certificate as to
the amount of such increased cost, submitted to Interface and the
Administrative Agent by such Lender in good faith and accompanied by a
statement prepared by such Lender describing in reasonable detail the
basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Administrative Agent
that at any time, because of the circumstances described in clauses (x)
or (y) in Section 3.10(a) or any other circumstances beyond such Lender's
reasonable control arising after the date of this Agreement affecting
such Lender or the London interbank market or the United States secondary
certificate of deposit market or such Lender's position in such markets,
the Adjusted LIBO Rate or the Fixed CD Rate, as the case may be, as
determined by the Administrative Agent, will not adequately and fairly
reflect the cost to such Lender of funding its portion of a Fixed Rate
Advance, then, and in any such event:
- 32 -<PAGE>
(i) the Administrative Agent shall forthwith give
notice (by telephone confirmed in writing) to Interface
and to the other Lenders of such advice;
(ii) Interface's right to request and such Lender's
obligation to make or permit portions of the Term Loans to
remain outstanding as a CD Rate Advance or Eurodollar
Advance, as the case may be, shall be immediately
suspended; and
(iii) such Lender shall make a Term Loan as part of
the requested Borrowing consisting of a CD Rate Advance or
Eurodollar Advance, as the case may be, as a Base Rate
Advance, which such Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing.
Section 3.11. Lending Offices.
(a) Each Lender agrees that, if requested by Interface,
it will use reasonable efforts (subject to overall policy considerations
of such Lender) to designate an alternate Lending Office with respect to
any of its portions of Fixed Rate Advances affected by the matters or
circumstances described in Sections 3.07(b), 3.08, 3.09 or 3.10 to reduce
the liability of Interface or avoid the results provided thereunder, so
long as such designation is not disadvantageous to such Lender as
determined by such Lender, which determination if made in good faith,
shall be conclusive and binding on all parties hereto. Nothing in this
Section 3.11 shall affect or postpone any of the obligations of Interface
or any right of any Lender provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with
respect to the closing of its lending offices in the United States such
that any withholdings or deductions and additional payments with respect
to Taxes may be required to be made by Interface thereafter pursuant to
Section 3.07(b), such Lender shall use reasonable efforts to furnish
Interface notice thereof as soon as practicable thereafter; provided,
however, that no delay or failure to furnish such notice shall in any
event release or discharge Interface from their obligations to such
Lender pursuant to Section 3.07(b) or otherwise result in any liability
of such Lender.
Section 3.12. Funding Losses. Interface shall compensate
each Lender, upon its written request to Interface (which request shall
set forth the basis for requesting such amounts in reasonable detail and
which request shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all of the parties hereto),
for all losses, expenses and liabilities (including, without limitation,
any interest paid by such Lender to lenders of funds borrowed by it to
make or carry its portions of Fixed Rate Advances to the extent not re-
covered by such Lender in connection with the re-employment of such funds
and including loss of anticipated profits), which the Lender may sustain:
(i) if for any reason (other than a default by such Lender) a borrowing
of, or conversion to or continuation of, Fixed Rate Advances does not
occur on the date specified therefor in a notice given by Interface to
the Administrative Agent as provided herein (whether or not withdrawn),
(ii) if any repayment (including mandatory prepayments and any
conversions pursuant to Section 3.09(b)) of any Fixed Rate Advances
occurs on a date which is not the last day of an Interest Period
applicable thereto, or (iii), if, for any reason, Interface defaults in
its obligation to repay its Fixed Rate Advances when required by the
terms of this Agreement.
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Section 3.13. Assumptions Concerning Funding of Fixed
Rate Advances. Calculation of all amounts payable to a Lender under this
Article III shall be made as though that Lender had actually funded its
portions of relevant Fixed Rate Advances through the purchase of deposits
in the relevant market, bearing interest at the rate applicable to such
Fixed Rate Advances in an amount equal to the amount of its portions of
the Fixed Rate Advances and having a maturity comparable to the relevant
Interest Period; provided however, that each Lender may fund its portions
of each of the Fixed Rate Advances in any manner it sees fit and the
foregoing assumption shall be used only for calculation of amounts
payable under this Article III.
Section 3.14. Apportionment of Payments. Aggregate
principal and interest payments in respect of the Term Loans shall be ap-
portioned among all outstanding Term Loans to which such payments relate,
proportionately to the Lenders' respective Pro Rata Shares of such
outstanding Term Loans. The Administrative Agent shall promptly
distribute to each Lender at its primary address set forth beside its
name on the appropriate signature page hereof or such other address as
any Lender may request its share of all such payments received by the
Administrative Agent.
Section 3.15. Sharing of Payments, Etc. If any Lender
shall obtain any payment or reduction (including, without limitation, any
amounts received as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code) of any obligation of Interface
hereunder (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share of
payments or reductions on account of such obligations obtained by all the
Lenders, such Lender shall forthwith (i) notify each of the other Lenders
and the Administrative Agents of such receipt, and (ii) purchase from the
other Lenders such participations in the affected obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, ratably with
each of them, provided that if all or any portion of such excess payment
or reduction is thereafter recovered from such purchasing Lender or
additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional
costs, but without interest unless the Lender obligated to return such
funds is required to pay interest on such funds. Interface agrees that
any Lender so purchasing a participation from another Lender pursuant to
this Section 3.15 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor
of Interface in the amount of such participation.
Section 3.16. Capital Adequacy. Without limiting any
other provision of this Agreement, in the event that any Lender shall
have determined that any law, treaty, governmental (or quasi-
governmental) rule, regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable as of the Closing
Date, or any change therein or in the interpretation or application
thereof, or compliance by such Lender with any request or directive
regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful) from a central bank
or governmental authority or body having jurisdiction, does or shall have
the effect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such law, treaty, rule, regulation,
guideline or order, or such change or compliance (taking into
- 34 -<PAGE>
consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then within ten Business
Days after written notice and demand by such Lender (with copies thereof
to the Administrative Agent), Interface shall from time to time pay to
such Lender additional amounts sufficient to compensate such Lender for
such reduction (but, in the case of outstanding Base Rate Advances,
without duplication of any amounts already recovered by such Lender by
reason of an adjustment in the applicable Base Rate). Each certificate
as to the amount payable under this Section 3.16 (which certificate shall
set forth the basis for requesting such amounts in reasonable detail),
submitted to Interface by any Lender in good faith, shall, absent
manifest error, be final, conclusive and binding for all purposes.
Section 3.17. Benefits to Guarantors. In consideration
for the execution and delivery by the Guarantors of their Guaranty
Agreement, Interface agrees to make the benefit of extensions of credit
hereunder available to the Guarantors.
Section 3.18. Limitation on Certain Payment Obligations.
(a) Each Lender or the Administrative Agent shall make
written demand on Interface for indemnification or compensation pursuant
to Section 3.07 no later than 90 days after the earlier of (i) the date
on which such Lender or the Administrative Agent makes payment of such
Taxes, and (ii) the date on which the relevant taxing authority or other
governmental authority makes written demand upon such Lender or the
Administrative Agent for payment of such Taxes.
(b) Each Lender or the Administrative Agent shall make
written demand on Interface for indemnification or compensation pursuant
to Section 3.12 no later than 90 days after the event giving rise to the
claim for indemnification or compensation occurs.
(c) Each Lender or the Administrative Agent shall make
written demand on Interface for indemnification or compensation pursuant
to Sections 3.09 and 3.16 no later than 90 days after such Lender or the
Administrative Agent receives actual notice or obtains actual knowledge
of the promulgation of a law, rule, order or interpretation or occurrence
of another event giving rise to a claim pursuant to such sections.
(d) In the event that the Lenders or the Administrative
Agent fail to give Interface notice within the time limitations
prescribed in (a) or (b) above, Interface shall have no obligation to pay
such claim for compensation or indemnification. In the event that the
Lender or the Administrative Agent fails to give Interface notice within
the time limitation prescribed in (c) above, Interface shall have no
obligation to pay any amount with respect to claims accruing prior to the
ninetieth day preceding such written demand.
ARTICLE IV.
CONDITIONS TO BORROWINGS
The obligation of each Lender to make the Term Loans to
Interface hereunder is subject to the satisfaction of the following
conditions:
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Section 4.01. Conditions Precedent to Funding of Term
Loans. At the time of the making of the Term Loans hereunder on the
Closing Date, all obligations of Interface hereunder incurred at or prior
to such funding of the Term Loans (including, without limitation,
Interface's obligations to reimburse the reasonable fees and expenses of
counsel to the Co-Agents and any fees and expenses payable to the
Co-Agents and the Lenders as previously agreed with Interface), shall
have been paid in full, and the Co-Agents shall have received the
following, in form and substance satisfactory in all respects to the Co-
Agents:
(a) the duly executed counterparts of this
Agreement;
(b) the duly completed Term Notes;
(c) the Guaranty Agreement and Contribution
Agreement;
(d) the Pledge Agreements accompanied, to the
extent relevant under applicable law, by (i) all stock
certificates representing the Pledged Stock, (ii) stock
powers for those shares duly executed in blank,
(iii) Uniform Commercial Code financing statements
relating thereto, and (iv) any other documentation
requested by the Collateral Agent in order to assure the
perfection of a first priority lien in such Pledged Stock
in favor of the Collateral Agent for the benefit of the
Lenders;
(e) certificate of Interface in substantially
the form of Exhibit F attached hereto and appropriately
completed;
(f) certificates of the Secretary or Assistant
Secretary of each of the Credit Parties (or, in the case
of any Foreign Subsidiary, a comparable company officer)
attaching and certifying copies of the resolutions of the
boards of directors (or, in the case of any Foreign
Subsidiary, the comparable governing body of such entity)
of the Credit Parties, authorizing as applicable (i) the
execution, delivery and performance of the Credit
Documents, and (ii) the granting of the pledges and
security interests granted pursuant to the Pledge
Agreements;
(g) certificates of the Secretary or an
Assistant Secretary of each of the Credit Parties (or, in
the case of any Foreign Subsidiary, a comparable company
officer) certifying (i) the name, title and true signature
of each officer of such entities executing the Credit
Documents, and (ii) the bylaws or comparable governing
documents of such entities;
(h) certified copies of the certificate or articles
of incorporation of each Credit Party (or comparable
organizational document of each Foreign Subsidiary),
together with certificates of good standing or existence,
as may be available from the Secretary of State (or
comparable office or registry for each Foreign Subsidiary)
of the jurisdiction of incorporation or organization of
such Credit Party;
- 36 -<PAGE>
(i) examination reports from the Uniform Commercial
Code records of Cobb County and Troup County, Georgia, the
Georgia Superior Court Clerks Cooperative Authority, and
the Secretaries of State of the States of California,
Maine, Michigan, Pennsylvania, and Texas, in each case
showing no outstanding liens or security interests granted
by any Credit Party other than (x) Liens permitted by
Section 7.02, and (y) Liens in favor of the Collateral
Agent (whether acting under this Agreement or the Credit
Agreement);
(j) copies of all documents and instruments,
including all consents, authorizations and filings,
required or advisable under any Requirement of Law or by
any material Contractual Obligation of the Credit Parties,
in connection with the execution, delivery, performance,
validity and enforceability of the Credit Documents and
the other documents to be executed and delivered
hereunder, and such consents, authorizations, filings and
orders shall be in full force and effect and all
applicable waiting periods shall have expired;
(k) certified copies of the Intercompany Loan Docu-
ments;
(l) acknowledgments from each of G. Kimbrough
Taylor, Jr. and Kilpatrick Stockton LLP as to their
appointment as agent for service of process for the
various Credit Parties;
(m) certified copies of indentures, credit
agreements, instruments, and other documents evidencing or
securing Indebtedness of any Consolidated Company
described on Schedule 7.01(b) or Schedule 7.01(j), in any
single case in an amount not less than $2,000,000 (or the
Dollar Equivalent thereof);
(n) certificates, reports and other information as
the Co-Agents may request from any Consolidated Company in
order to satisfy the Lenders as to the absence of any
material liabilities or obligations arising from matters
relating to employees of the Consolidated Companies,
including employee relations, collective bargaining
agreements, Plans, Foreign Plans, and other compensation
and employee benefit plans;
(o) certificates, reports, environmental audits and
investigations, and other information as the Co-Agents may
request from any Consolidated Company in order to satisfy
the Lenders as to the absence of any material liabilities
or obligations arising from environmental and employee
health and safety exposures to which the Consolidated
Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(p) certificates, reports and other information as
the Co-Agents may request from any Consolidated Company in
order to satisfy the Lenders as to the absence of any
material liabilities or obligations arising from
litigation (including without limitation, products
- 37 -<PAGE>
liability and patent infringement claims) pending or
threatened against the Consolidated Companies;
(q) a summary, set forth in format and detail
acceptable to the Co-Agents, of the types and amounts of
insurance (property and liability) maintained by the
Consolidated Companies;
(r) the favorable opinions of (i) Kilpatrick
Stockton LLP, United States counsel to the Credit Parties,
substantially in the form of Exhibit G-1, (ii) Paisner &
Co., United Kingdom counsel to Europe Limited
substantially in the form of Exhibit G-2, and (iii) Nauta
Dutilh, Netherlands counsel to Scherpenzeel B.V. substan-
tially in the form of Exhibit G-3, in each case addressed
to the Co-Agents and each of the Lenders, and covering
such other matters as either Co-Agent or any Lender may
reasonably request;
(s) the favorable opinions of Clifford Chance,
special counsel to the Co-Agents and the Lenders, as to
any matters relating to the Credit Documents under the
laws of the United Kingdom and the Netherlands as may be
requested by the Co-Agents;
(t) the favorable opinion of Allen, Allen & Hemsley
(or Allens Arthur Robinson), special Australian counsel to
the Co-Agents and the Lenders, as to any matters relating
to the Credit Documents arising under Australian law as
may be requested by the Co-Agents;
(u) the favorable opinion of McCarthy Tetrault,
special Canadian counsel to the Co-Agents and the Lenders,
as to any matters relating to the Credit Documents arising
under Canadian law as may be requested by the Co-Agents;
and
(v) a certificate of the president, chief financial
officer or principal accounting officer of Interface as to
the calculation in reasonable detail of the "Consolidated
Fixed Charge Coverage Ratio" (as defined in the Senior
Subordinated Notes Indenture) of Interface, demonstrating
to the satisfaction of the Co-Agents and the Lenders that
at the time of the funding of the Term Loans, and after
giving pro forma effect thereto, such "Consolidated Fixed
Charge Coverage Ratio" of Interface exceeds 2.50:1.00, and
that the Term Loans will constitute "Senior Indebtedness"
for all purposes under the Senior Subordinated Notes
Indenture.
In addition to the foregoing, the following conditions shall have been
satisfied or shall have existed, all to the satisfaction of the
Co-Agents, as of the time the Term Loans were made hereunder:
(w) the Term Loans and the use of proceeds thereof
shall not have contravened, violated or conflicted with,
or involved the Co-Agents or any Lender in a violation of,
any law, rule, injunction, or regulation, or determination
of any court of law or other governmental authority; and
(x) all corporate proceedings and all other legal
matters in connection with the authorization, legality,
validity and enforceability of the Credit Documents shall
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have been reasonably satisfactory in form and substance to
the Required Lenders.
Section 4.02. Other Conditions to Term Loans. At the
time of the making of the Term Loans (before as well as after giving
effect to such Term Loans and the proposed use of the proceeds thereof),
the following conditions shall have been satisfied or shall exist:
(a) there shall exist no Default or Event of
Default;
(b) all representations and warranties by Interface
contained herein, and all representations and warranties
by Interface contained herein, shall be true and correct
in all material respects with the same effect as though
such representations and warranties had been made on and
as of the date of such Term Loans (except that the
representation and warranty set forth in Section 5.19
shall not be deemed to relate to any time subsequent to
the date of the Term Loans hereunder);
(c) since the date of the most recent financial
statements of the Consolidated Companies described in
Section 5.14(a), there shall have been no change which has
had or could reasonably be expected to have a Materially
Adverse Effect (whether or not any notice with respect to
such change has been furnished to the Lenders pursuant to
Section 6.07);
(d) there shall be no action or proceeding
instituted or pending before any court or other
governmental authority or, to the knowledge of Interface,
threatened (i) which reasonably could be expected to have
a Materially Adverse Effect, or (ii) seeking to prohibit
or restrict one or more Credit Party's ownership or
operation of any portion of its business or assets, or to
compel one or more Credit Party to dispose of or hold
separate all or any portion of its businesses or assets,
where such portion or portions of such business(es) or
assets, as the case may be, constitute a material portion
of the total businesses or assets of the Consolidated
Companies;
(e) the Term Loans to be made and the use of
proceeds thereof shall not contravene, violate or conflict
with, or involve the Co-Agents or any Lender in a
violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental
authority applicable to Interface;
(f) Interface shall have given to the Co-Agents with
its notice of Borrowing written notice of its intent to
use any proceeds of any Loan then being requested for the
purchase or carrying of any "margin stock" (as defined in
the Margin Regulations);
(g) The Co-Agents shall have received such other
documents (including, without limitation, any necessary
Federal Reserve Form U-1 or other similar form required by
the Margin Regulations) or legal opinions as the Co-Agents
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<PAGE>
or any Lender may reasonably request, all in form and
substance reasonably satisfactory to the Co-Agents; and
(h) Interface shall have paid all proceeds of the
Term Loans to be applied against the "Domestic Syndicated
Loans" outstanding under the Credit Agreement, as provided
by the terms of the Credit Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Interface (as to itself and all other Consolidated
Companies) represents and warrants as follows:
Section 5.01. Organizational Existence; Compliance with
Law. Each of the Consolidated Companies is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization, and each of the Credit Parties has the corporate or other
organizational power and authority and the legal right to own and
operate its property and to conduct its business. Each of the
Consolidated Companies (i) other than the Credit Parties, has the
corporate or other organizational power and authority and the legal right
to own and operate its property and to conduct its business, (ii) is duly
qualified as a foreign corporation or other organization and in good
standing under the laws of each jurisdiction where its ownership of
property or the conduct of its business requires such qualification, and
(iii) is in compliance with all Requirements of Law, where (a) with
respect to those Consolidated Companies that are not Credit Parties, the
failure to have such power, authority and legal right as set forth in
clause (i), (b) the failure to be so qualified or in good standing as set
forth in clause (ii), or (c) the failure to comply with Requirements of
Law as set forth in clause (iii), would reasonably be expected, in the
aggregate, to have a Materially Adverse Effect. The jurisdiction of
incorporation or organization, and the ownership of all issued and
outstanding capital stock or other equity interests for each Subsidiary
as of the date of this Agreement is accurately described on
Schedule 5.01.
Section 5.02. Organizational Power; Authorization. Each
of the Credit Parties has the corporate or other organizational power and
authority to make, deliver and perform the Credit Documents to which it
is a party and has taken all necessary corporate or other organizational
action to authorize the execution, delivery and performance of such
Credit Documents. No consent or authorization of, or filing with, any
Person (including, without limitation, any governmental authority), is
required in connection with the execution, delivery or performance by any
Credit Party, or the validity or enforceability against any Credit Party,
of the Credit Documents, other than such consents, authorizations or
filings which have been made or obtained (including without limitation,
any necessary consultations with any Credit Party's supervisory board,
works council ("Ondernemingsraad") or similar body).
Section 5.03. Enforceable Obligations. This Agreement
has been duly executed and delivered, and each other Credit Document will
be duly executed and delivered, by the respective Credit Parties, and
this Agreement constitutes, and each other Credit Document when executed
and delivered will constitute, legal, valid and binding obligations of
the Credit Parties, respectively, enforceable against the Credit Parties
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar
- 40 -<PAGE>
laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
Section 5.04. No Legal Bar. The execution, delivery and
performance by the Credit Parties of the Credit Documents will not
violate any Requirement of Law or cause a breach or default under any of
their respective Contractual Obligations.
Section 5.05. No Material Litigation. Except as set
forth on Schedule 5.05 or in any notice furnished to the Lenders pursuant
to Section 6.07(i) at or prior to the respective times the
representations and warranties set forth in this Section 5.05 are made or
deemed to be made hereunder, no litigation, investigations or proceedings
of or before any courts, tribunals, arbitrators or governmental
authorities are pending or, to the knowledge of Interface, threatened by
or against any of the Consolidated Companies, or against any of their
respective properties or revenues, existing or future (a) with respect to
any Credit Document, or any of the transactions contemplated hereby or
thereby, or (b) which, if adversely determined, would reasonably be
expected to have a Materially Adverse Effect.
Section 5.06. Investment Company Act, Etc. None of the
Credit Parties is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in
the Investment Company Act of 1940, as amended). None of the Credit
Parties is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, or any foreign, federal or local
statute or regulation limiting its ability to incur indebtedness for
money borrowed, guarantee such indebtedness, or pledge its assets to
secure such indebtedness, as contemplated hereby or by any other Credit
Document.
Section 5.07. Margin Regulations. No part of the pro-
ceeds of any of the Term Loans will be used for any purpose which vio-
lates, or which would be inconsistent or not in compliance with, the
provisions of the applicable Margin Regulations.
Section 5.08. Compliance With Environmental Laws.
(a) The Consolidated Companies have received no notices
of claims or potential liability under, and are in compliance with, all
applicable Environmental Laws, where such claims and liabilities under,
and failures to comply with, such statutes, regulations, rules,
ordinances, laws or licenses, would reasonably be expected to result in
penalties, fines, claims or other liabilities (including, without
limitation, remediation costs and expenses) to the Consolidated Companies
in amounts in excess of $4,500,000, either individually or in the
aggregate (including any such penalties, fines, claims, or liabilities
relating to the matters set forth on Schedule 5.08(a)), except as set
forth on Schedule 5.08(a) or in any notice furnished to the Lenders
pursuant to Section 6.07(j) at or prior to the respective times the
representations and warranties set forth in this Section 5.08(a) are made
or deemed to be made hereunder.
(b) Except as set forth on Schedule 5.08(b) or in any
notice furnished to the Lenders pursuant to Section 6.07(j) at or prior
to the respective times the representations and warranties set forth in
this Section 5.08(b) are made or deemed to be made hereunder, none of the
Consolidated Companies has received during the period from January 1,
1983 through the date of this Agreement, any notice of violation, or
notice of any action, either judicial or administrative, from any
governmental authority (whether United States or foreign) relating to the
- 41 -<PAGE>
actual or alleged violation of any Environmental Law, including, without
limitation, any notice of any actual or alleged spill, leak, or other
release of any Hazardous Substance, waste or hazardous waste by any
Consolidated Company or its employees or agents, or as to the existence
of any contamination on any properties owned by any Consolidated Company,
where any such violation, spill, leak, release or contamination would
reasonably be expected to result in penalties, fines, claims or other
liabilities (including, without limitation, remediation costs and
expenses) to the Consolidated Companies in amounts in excess of
$4,500,000, either individually or in the aggregate (including any such
penalties, fines, claims or liabilities relating to the matters set forth
on Schedule 5.08(a)); provided, however, that with respect to the period
from January 1, 1983, through December 31, 1986, such representation and
warranty shall be deemed to be made only with respect to notices known to
and disclosed by the Consolidated Companies in this Agreement and any
additional notices of which any Credit Party has actual knowledge as of
the date of this Agreement or hereafter.
(c) The Consolidated Companies have obtained all neces-
sary governmental permits, licenses and approvals which are material to
the operations conducted on their respective properties, including
without limitation, all required material permits, licenses and approvals
for (i) the emission of air pollutants or contaminates, (ii) the
treatment or pretreatment and discharge of waste water or storm water,
(iii) the treatment, storage, disposal or generation of hazardous wastes,
(iv) the withdrawal and usage of ground water or surface water, and
(v) the disposal of solid wastes.
Section 5.09. Insurance. The Consolidated Companies
currently maintain insurance with respect to their respective properties
and businesses, with financially sound and reputable insurers, having
coverages against losses or damages of the kinds customarily insured
against by reputable companies in the same or similar businesses, such
insurance being in amounts no less than those amounts which are customary
for such companies under similar circumstances. The Consolidated
Companies have paid all material amounts of insurance premiums now due
and owing with respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect.
Section 5.10. No Default. None of the Consolidated
Companies is in default under or with respect to any Contractual
Obligation in any respect which has had or is reasonably expected to have
a Materially Adverse Effect.
Section 5.11. No Burdensome Restrictions. Except as set
forth on Schedule 5.11 or in any notice furnished to the Lenders pursuant
to Section 6.07(p) at or prior to the respective times the
representations and warranties set forth in this Section 5.11 are made or
deemed to be made hereunder, none of the Consolidated Companies is a
party to or bound by any Contractual Obligation or Requirement of Law
which has had or would reasonably be expected to have a Materially
Adverse Effect.
Section 5.12. Taxes. Except as set forth on Sched-
ule 5.12, each of the Consolidated Companies have filed or caused to be
filed all declarations, reports and tax returns which are required to
have been filed, and has paid all taxes, custom duties, levies, charges
and similar contributions ("taxes" in this Section 5.12) shown to be due
and payable on said returns or on any assessments made against it or its
properties, and all other taxes, fees or other charges imposed on it or
any of its properties by any governmental authority (other than those the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
- 42 -<PAGE>
with GAAP have been provided in its books); and no tax liens have been
filed and, to the knowledge of Interface, no claims are being asserted
with respect to any such taxes, fees or other charges; excluding,
however, for purposes of the foregoing portions of this Section, tax
returns not filed or taxes not paid where the aggregate amount of taxes
involved does not exceed $2,500,000 in the aggregate and the failure to
file such returns or pay such taxes has resulted from the Consolidated
Companies being without knowledge that the respective tax authorities are
claiming such taxes to be due.
Section 5.13. Subsidiaries. Except as disclosed on
Schedule 5.01, on the date of this Agreement, Interface has no
Subsidiaries and neither Interface nor any Subsidiary is a joint venture
partner or general partner in any partnership. After the date of this
Agreement, except as disclosed on Schedule 5.13 or in any notice
furnished pursuant to Section 6.07(q) at or prior to the respective times
the representations and warranties set forth in this Section 5.13 are
made or deemed to be made hereunder, Interface has no Material
Subsidiaries.
Section 5.14. Financial Statements. Interface has
furnished to the Co-Agents and the Lenders (i) the audited consolidated
balance sheet of the Consolidated Companies as at December 29, 1996 and
the related consolidated statements of income, shareholders' equity and
cash flows for the 52-week period then ended, including in each case the
related schedules and notes, and (ii) the unaudited balance sheet of the
Consolidated Companies as at the end of the first fiscal quarter of 1997,
and the related unaudited consolidated statements of income,
shareholders' equity, and cash flows for the period then ended, setting
forth in each case in comparative form the figures for the previous
fiscal year and first fiscal quarter, as the case may be. The foregoing
financial statements fairly present in all material respects the
consolidated financial condition of such Consolidated Companies as at the
dates thereof and results of operations for such periods in conformity
with GAAP consistently applied. Such Consolidated Companies taken as a
whole do not have any material contingent obligations, contingent
liabilities, or material liabilities for known taxes, long-term leases or
unusual forward or long-term commitments not reflected in the foregoing
financial statements or the notes thereto. Since December 29, 1996,
there have been no changes with respect to such Consolidated Companies
which has had or would reasonably be expected to have a Materially
Adverse Effect.
Section 5.15. ERISA. Except as disclosed on Sched-
ule 5.15 or in any notice furnished to the Lenders pursuant to
Section 6.07(k) at or prior to the respective times the representations
and warranties set forth in this Section 5.15 are made or deemed to be
made hereunder:
(a)(1) Identification of Plans. (A) None of the Con-
solidated Companies nor any of their respective ERISA Affiliates
maintains or contributes to, or has during the past two years maintained
or contributed to, any Plan that is subject to Title IV of ERISA, and
(B) none of the Consolidated Companies maintains or contributes to any
Foreign Plan;
(2) Compliance. Each Plan and each Foreign Plan main-
tained by the Consolidated Companies have at all times been maintained,
by their terms and in operation, in compliance with all applicable laws,
and the Consolidated Companies are subject to no tax or penalty with
respect to any Plan of such Consolidated Company or any ERISA Affiliate
thereof, including without limitation, any tax or penalty under Title I
- 43 -<PAGE>
or Title IV of ERISA or under Chapter 43 of the Tax Code, or any tax or
penalty resulting from a loss of deduction under Sections 162, 404, or
419 of the Tax Code, where the failure to comply with such laws, and such
taxes and penalties, together with all other liabilities referred to in
this Section 5.15 (taken as a whole), would in the aggregate have a
Materially Adverse Effect;
(3) Liabilities. The Consolidated Companies are subject
to no liabilities (including withdrawal liabilities) with respect to any
Plans or Foreign Plans of such Consolidated Companies or any of their
ERISA Affiliates, including without limitation, any liabilities arising
from Titles I or IV of ERISA, other than obligations to fund benefits
under an ongoing Plan and to pay current contributions, expenses and
premiums with respect to such Plans or Foreign Plans, where such
liabilities, together with all other liabilities referred to in this
Section 5.15 (taken as a whole), would in the aggregate have a Materially
Adverse Effect;
(4) Funding. The Consolidated Companies and, with re-
spect to any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (A) required to be contributed under the terms of each Plan and
applicable law, and (B) required to be paid as expenses (including PBGC
or other premiums) of each Plan, where the failure to pay such amounts
(when taken as a whole, including any penalties attributable to such
amounts) would have a Materially Adverse Effect. No Plan subject to
Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if such Plan
terminated on any date on which this representation and warranty is
deemed made, in any amount which, together with all other liabilities
referred to in this Section 5.15 (taken as a whole), would have a Materi-
ally Adverse Effect if such amount were then due and payable. The
Consolidated Companies are subject to no liabilities with respect to
post-retirement medical benefits in any amounts which, together with all
other liabilities referred to in this Section 5.15 (taken as a whole),
would have a Materially Adverse Effect if such amounts were then due and
payable.
(b) With respect to any Foreign Plan, reasonable reserves
have been established in accordance with prudent business practice or
where required by ordinary accounting practices in the jurisdiction where
the Foreign Subsidiary maintains its principal place of business or in
which the Foreign Plan is maintained. The aggregate unfunded
liabilities, after giving effect to any reserves for such liabilities,
with respect to such Foreign Plans, together with all other liabilities
referred to in this Section 5.15 (taken as a whole), would not have a
Materially Adverse Effect.
Section 5.16. Patents, Trademarks, Licenses, Etc. Except
as set forth on Schedule 5.16 or in any notice furnished to the Lenders
pursuant to Section 6.07(p) at or prior to the respective times the
representations and warranties set forth in this Section 5.16 are made
or deemed to be made hereunder, (i) the Consolidated Companies have
obtained and hold in full force and effect all material patents,
trademarks, service marks, trade names, copyrights, licenses and other
such rights, free from burdensome restrictions, which are necessary for
the operation of their respective businesses as presently conducted, and
(ii) to the best of Interface's knowledge, no product, process, method,
service or other item presently sold by or employed by any Consolidated
Company in connection with such business infringes any patents,
trademark, service mark, trade name, copyright, license or other right
owned by any other person and there is not presently pending, or to the
knowledge of Interface, threatened, any claim or litigation against or
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affecting any Consolidated Company contesting such Person's right to sell
or use any such product, process, method, substance or other item where
the result of such failure to obtain and hold such benefits or such
infringement would have a Materially Adverse Effect.
Section 5.17. Ownership of Property. Except as set forth
on Schedule 5.17, (i) each Consolidated Company that is not a Foreign
Subsidiary has good and marketable fee simple title to or a valid
leasehold interest in all of its real property and good title to, or a
valid leasehold interest in, all of its other property, and (ii) each
Foreign Subsidiary owns or has a valid leasehold interest in all of its
real property and owns or has a valid leasehold interest in, all of its
other properties, in the case of clauses (i) and (ii) as such properties
are reflected in the consolidated balance sheet of the Consolidated
Companies as of December 29, 1996, referred to in Section 5.14, other
than properties disposed of in the ordinary course of business since such
date or as otherwise permitted by the terms of this Agreement, subject to
no Lien or title defect of any kind, except Liens permitted hereby and
title defects not constituting material impairments in the intended use
for such properties. The Consolidated Companies enjoy peaceful and
undisturbed possession under all of their respective leases.
Section 5.18. Indebtedness. Except as set forth on
Schedule 7.01, none of the Consolidated Companies is an obligor in
respect of any Indebtedness for borrowed money, or any commitment to
create or incur any Indebtedness for borrowed money, in an amount not
less than $1,000,000 in any single case, and such Indebtedness and
commitments for amounts less than $1,000,000 do not exceed $5,000,000 in
the aggregate for all such Indebtedness and commitments of the
Consolidated Companies.
Section 5.19. Financial Condition. On the Closing Date
and after giving effect to the transactions contemplated by this
Agreement and the other Credit Documents, including without limitation,
the use of the proceeds of the Term Loans as provided in Article II (i)
assets of each Credit Party at fair valuation and based on their present
fair saleable value (including, without limitation, the fair and real-
istic value of (x) any contribution or subrogation rights in respect of
any Guaranty Agreement given by such Credit Party, and (y) any
Intercompany Loan owed to such Credit Party) will exceed such Credit
Party's debts, including contingent liabilities (as such liabilities may
be limited under the express terms of any Guaranty Agreement of such
Credit Party), (ii) the remaining capital of such Credit Party will not
be unreasonably small to conduct the Credit Party's business, and
(iii) such Credit Party will not have incurred debts, or have intended to
incur debts, beyond the Credit Party's ability to pay such debts as they
mature. For purposes of this Section 5.19, "debt" means any liability on
a claim, and "claim" means (a) the right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (b) the right to an equitable remedy for breach
of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.
Section 5.20. Intercompany Loans. The Intercompany Loans
and the Intercompany Loan Documents have been duly authorized and
approved by all necessary corporate and shareholder action on the part of
the parties thereto, and constitute the legal, valid and binding
obligations of the parties thereto, enforceable against each of them in
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accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, and by general principles of
equity.
Section 5.21. Labor Matters. Except as set forth in
Schedule 5.21 or in any notice furnished to the Lenders pursuant to
Section 6.07(p) at or prior to the respective times the representations
and warranties set forth in this Section 5.21 are made or deemed to be
made hereunder, the Consolidated Companies have experienced no strikes,
labor disputes, slow downs or work stoppages due to labor disagreements
which have had, or would reasonably be expected to have, a Materially
Adverse Effect, and, to the best knowledge of Interface, there are no
such strikes, disputes, slow downs or work stoppages threatened against
any Consolidated Company. The hours worked and payment made to employees
of the Consolidated Companies have not been in violation in any material
respect of the Fair Labor Standards Act (in the case of Consolidated
Companies that are not Foreign Subsidiaries) or any other applicable law
dealing with such matters. All payments due from the Consolidated
Companies, or for which any claim may be made against the Consolidated
Companies, on account of wages and employee health and welfare insurance
and other benefits have been paid or accrued as liabilities on the books
of the Consolidated Companies where the failure to pay or accrue such
liabilities would reasonably be expected to have a Materially Adverse
Effect.
Section 5.22. Payment or Dividend Restrictions. Except
as set forth in Section 7.12 or described on Schedule 5.22, none of the
Consolidated Companies is party to or subject to any agreement or
understanding restricting or limiting the payment of any dividends or
other distributions by any such Consolidated Company.
Section 5.23. Disclosure. No representation or warranty
contained in this Agreement (including the Schedules attached hereto) or
in any other document furnished from time to time pursuant to the terms
of this Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary
to make the statements herein or therein not misleading as of the date
made or deemed to be made. Except as may be set forth herein (including
the Schedules attached hereto) or in any notice furnished to the Lenders
pursuant to Section 6.07 at or prior to the respective times the
representations and warranties set forth in this Section 5.23 are made or
deemed to be made hereunder, there is no fact known to Interface which
has had, or is reasonably expected to have, a Materially Adverse Effect.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Term Loan shall remain outstanding or any
other Obligation shall remain unpaid, Interface will:
Section 6.01. Organizational Existence, Etc. Preserve
and maintain, and cause each of its Material Subsidiaries to preserve and
maintain, its corporate or other organizational existence, its material
rights, franchises, and licenses, and its material patents and copyrights
(for the scheduled duration thereof), trademarks, trade names, and ser-
vice marks, necessary or desirable in the normal conduct of its business,
and its qualification to do business as a foreign corporation or other
organization in all jurisdictions where it conducts business or other
activities making such qualification necessary, where the failure to be
so qualified would reasonably be expected to have a Materially Adverse
Effect.
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Section 6.02. Compliance with Laws, Etc. Comply, and
cause each of its Subsidiaries to comply with all Requirements of Law
(including, without limitation, the Environmental Laws subject to the
exception set forth in Section 5.08(a) where the penalties, claims,
fines, and other liabilities resulting from noncompliance with such
Environmental Laws do not involve amounts in excess of $10,000,000 in the
aggregate) and Contractual Obligations applicable to or binding on any of
them where the failure to comply with such Requirements of Law and
Contractual Obligations would reasonably be expected to have a Materially
Adverse Effect.
Section 6.03. Payment of Taxes and Claims, Etc. Pay, and
cause each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all
claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate reserves
are maintained with respect thereto.
Section 6.04. Keeping of Books. Keep, and cause each of
its Subsidiaries to keep, proper books of record and account, containing
complete and accurate entries of all their respective financial and
business transactions which are required to be maintained in order to
prepare the consolidated financial statements of Interface in conformity
with GAAP.
Section 6.05. Visitation, Inspection, Etc. Permit, and
cause each of its Subsidiaries to permit, any representative of any Co-
Agent or Lender to visit and inspect any of its property, to examine its
books and records and to make copies and take extracts therefrom, and to
discuss its affairs, finances and accounts with its officers, all at such
reasonable times and as often as such Co-Agent or Lender may reasonably
request after reasonable prior notice to Interface; provided, however,
that at any time following the occurrence and during the continuance of a
Default or an Event of Default, no prior notice to Interface shall be
required. To the extent that any Co-Agent or Lender thereby obtains
possession of non-public information constituting trade secrets,
technology or other similar proprietary information identified to the Co-
Agent or Lender in writing by Interface as being subject to confidential
treatment under this Agreement, such party shall treat such information
as confidential. In any event, such Co-Agent or Lender may, subject to
Section 10.06(e), make disclosure to any assignee or participant, or to
any prospective assignee or participant, in connection with an assignment
or participation permitted thereby, or as required or requested by any
governmental agency or representative thereof, or as required to defend
any legal action or to exercise any rights, remedies or powers available
to the Agents or Lender under the Credit Documents or as otherwise
required by law or pursuant to legal process; provided, that, unless
prohibited by applicable law or court order, such Co-Agent or Lender
shall notify Interface as promptly as practicable after receipt thereof
of any governmental request, subpoena or court order (other than any such
request, subpoena or court order in connection with an examination of the
financial condition of such Co-Agent or Lender by any governmental
agency) for disclosure of any such non-public information; provided, how-
ever, that no delay or failure to provide such notice shall give rise to
any claim, defense or right of offset against such Lender or Co-Agent
hereunder. The foregoing shall not prohibit disclosure of such
information to the extent it has become public information other than
through a disclosure by a Co-Agent or Lender not otherwise permitted
herein.
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Section 6.06. Insurance; Maintenance of Properties.
(a) Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties
and business, and the properties and business of its Subsidiaries,
against loss or damage of the kinds customarily insured against by
reputable companies in the same or similar businesses, such insurance to
be of such types and in such amounts as is customary for such companies
under similar circumstances; provided, however, that in any event
Interface shall use its best efforts to maintain, or cause to be
maintained, insurance in amounts and with coverages not materially less
favorable to any Consolidated Company as in effect on the date of this
Agreement, except where the costs of maintaining such insurance would, in
the judgment of both Interface and the Co-Agents, be excessive.
(b) Cause, and cause each of the Consolidated Companies
to cause, all properties used or useful in the conduct of its business to
be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the judgment of Interface may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
this Section shall prevent Interface from discontinuing the operation or
maintenance of any such properties if such discontinuance is, in the
judgment of Interface, desirable in the conduct of its business or the
business of any Consolidated Company.
Section 6.07. Reporting Covenants. Furnish to each
Lender:
(a) Annual Financial Statements. As soon as
available and in any event within 120 days after the end of each fiscal
year of Interface, balance sheets of the Consolidated Companies as at the
end of such year, presented on a consolidated and a "line of business"
basis, and the related statements of income, shareholders' equity, and
cash flows of the Consolidated Companies for such fiscal year, presented
on a consolidated and a "line of business" basis, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and, except with respect to the financial statements
prepared on a "line of business" basis, accompanied by a report thereon
of BDO Seidman or other independent public accountants of comparable
recognized national standing, which such report shall be unqualified as
to going concern and scope of audit and shall state that such financial
statements present fairly in all material respects the financial
condition as at the end of such fiscal year on a consolidated basis, and
the results of operations and statements of cash flows of the
Consolidated Companies for such fiscal year in accordance with GAAP and
that the examination by such accountants in connection with such consoli-
dated financial statements has been made in accordance with generally
accepted auditing standards;
(b) Quarterly Financial Statements. As soon as
available and in any event within 60 days after the end of each fiscal
quarter of Interface (other than the fourth fiscal quarter), balance
sheets of the Consolidated Companies as at the end of such quarter
presented on a consolidated and a "line of business" basis and the
related statements of income, shareholders' equity, and cash flows of the
Consolidated Companies for such fiscal quarter and for the portion of
Interface's fiscal year ended at the end of such quarter, presented on a
consolidated and a "line of business" basis setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of Interface's previous fiscal year, all in
reasonable detail and certified by the chief financial officer or
- 48 -<PAGE>
principal accounting officer of Interface that such financial statements
fairly present in all material respects the financial condition of the
Consolidated Companies as at the end of such fiscal quarter on a
consolidated and "line of business" basis, and the results of operations
and statements of cash flows of the Consolidated Companies for such
fiscal quarter and such portion of Interface's fiscal year, in accordance
with GAAP consistently applied (subject to normal year-end audit
adjustments and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together
with the financial statements required pursuant to subsections (a) and
(b) above, a certificate of the president, chief financial officer or
principal accounting officer of Interface (i) to the effect that, based
upon a review of the activities of the Consolidated Companies and such
financial statements during the period covered thereby, there exists no
Event of Default and no Default under this Agreement, or if there exists
an Event of Default or a Default hereunder, specifying the nature thereof
and the proposed response thereto, and (ii) demonstrating in reasonable
detail compliance as at the end of such fiscal year or such fiscal
quarter with Section 6.08 and Sections 7.01 through 7.05;
(d) Excess Cash Flow Certificate. Together with the
financial statements required pursuant to subsection (a) above, a
certificate of the president, chief financial officer or principal
accounting officer of Interface setting forth the calculation of Excess
Cash Flow in reasonable detail for the fiscal year covered by such
financial statements;
(e) Auditor's No Default Certificate. Together with
the financial statements required pursuant to subsection (a) above, a
certificate of the accountants who prepared the report referred to
therein, to the effect that, based upon their audit, there exists no
Default or Event of Default under this Agreement, or if there exists a
Default or Event of Default hereunder, specifying the nature thereof;
(f) Annual Budget. Within 120 days after the
beginning of each fiscal year, an annual financial plan and forecasted
balance sheets and statements of income, shareholders' equity, and cash
flows for such fiscal year for the Consolidated Companies presented on a
consolidated and "line of business" basis;
(g) Notice of Default. Promptly after any officer
of Interface or any other Borrower has notice or knowledge of the
occurrence of an Event of Default or a Default, a certificate of the
chief financial officer or principal accounting officer of Interface
specifying the nature thereof and the proposed response thereto;
(h) Asset Sales. Together with the financial state-
ments required pursuant to subsection (a) above, a certificate of the
chief financial officer or principal accounting officer of Interface
reporting all Asset Sales effected by the Consolidated Companies during
the fiscal year covered by such financial statements which involved Asset
Values in excess of $1,000,000 in any single transaction or related se-
ries of transactions, including the Asset Value of such assets and the
amounts received by the Consolidated Companies with respect to such
sales, and such other information regarding such transactions as any
Co-Agent or Lender may reasonably request;
(i) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of or any material adverse development
in any material action, suit or proceeding or any governmental
investigation or any arbitration, before any court or arbitrator or any
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governmental or administrative body, agency or official, against any
Consolidated Company, or any material property of any thereof, or
(ii) actual knowledge thereof, notice of the threat of any such action,
suit, proceeding, investigation or arbitration;
(j) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or notice of any
action, claim or request for information, either judicial or
administrative, from any governmental authority relating to any actual or
alleged claim, notice of potential responsibility under or violation of
any Environmental Law, or any actual or alleged spill, leak, disposal or
other release of any waste, petroleum product, or hazardous waste or
Hazardous Substance by any Consolidated Company which could result in
penalties, fines, claims or other liabilities to any Consolidated Company
in amounts in excess of $1,000,000;
(k) ERISA. (A)(i) Promptly after the occurrence
thereof with respect to any Plan of any Consolidated Company or any ERISA
Affiliate thereof, or any trust established thereunder, notice of (A) a
"reportable event" described in Section 4043 of ERISA and the regulations
issued from time to time thereunder (other than a "reportable event" not
subject to the provisions for 30-day notice to the PBGC under such
regulations), or (B) any other event which could subject any
Consolidated Company to any tax, penalty or liability under Title I or
Title IV of ERISA or Chapter 43 of the Tax Code, or any tax or penalty
resulting from a loss of deduction under Sections 162, 404 or 419 of the
Tax Code, or any tax, penalty or liability under any Requirement of Law
applicable to any Foreign Plan, where any such taxes, penalties or li-
abilities exceed or could exceed $1,000,000 in the aggregate;
(ii) Promptly after such notice must be provided to
the PBGC, or to a Plan participant, beneficiary or alter-
native payee, any notice required under Section 101(d),
302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of
ERISA or under Section 401(a)(29) or 412 of the Tax Code
with respect to any Plan of any Consolidated Company or
any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received by
any Consolidated Company or any ERISA Affiliate thereof
concerning the intent of the PBGC or any other
governmental authority to terminate a Plan of such Company
or ERISA Affiliate thereof which is subject to Title IV of
ERISA, to impose any liability on such Company or ERISA
Affiliate under Title IV of ERISA or Chapter 43 of the Tax
Code;
(iv) Promptly upon the filing thereof with the
Internal Revenue Service ("IRS") or the Department of
Labor ("DOL"), a copy of IRS Form 5500 or annual report
for each Plan of any Consolidated Company or ERISA
Affiliate thereof which is subject to Title IV of ERISA;
(v) Upon the request of the Co-Agents, (A) true and
complete copies of any and all documents, government re-
ports and IRS determination or opinion letters or rulings
for any Plan of any Consolidated Company from the IRS,
PBGC or DOL, (B) any reports filed with the IRS, PBGC or
DOL with respect to a Plan of the Consolidated Companies
or any ERISA Affiliate thereof, or (C) a current statement
of withdrawal liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate thereof;
- 50 -<PAGE>
(B) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan
have not been made by the required due date for such contribution and
such default cannot immediately be remedied, (ii) any Foreign Plan is not
funded to the extent required by the law of the jurisdiction whose law
governs such Foreign Plan based on the actuarial assumptions reasonably
used at any time, or (iii) a material change is anticipated to any
Foreign Plan that may have a Materially Adverse Effect.
(l) Liens. Promptly upon any Consolidated Company
becoming aware thereof, notice of the filing of any federal statutory
Lien, tax or other state or local government Lien or any other Lien
affecting their respective properties, other than those Liens expressly
permitted by Section 7.02;
(m) Domestication of Subsidiaries. Not less than
30 days prior thereto, notice of any intended domestication of any
Foreign Subsidiary as a United States corporation, whether by merger,
stock transfer or otherwise;
(n) Public Filings, Etc. Promptly upon the filing
thereof or otherwise becoming available, copies of all financial
statements, annual, quarterly and special reports, proxy statements and
notices sent or made available generally by Interface to its public
security holders, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any of them
with any securities exchange, and of all press releases and other
statements made available generally to the public containing material
developments in the business or financial condition of Interface and the
other Consolidated Companies;
(o) Accountants' Reports. Promptly upon receipt
thereof, copies of all financial statements of, and all reports submitted
by, independent public accountants to Interface in connection with each
annual, interim, or special audit of Interface's financial statements,
including without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(p) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or occurrence of
(i) any Contractual Obligation or Requirement of Law described in
Section 5.11, (ii) failure of any Consolidated Company to hold in full
force and effect those trademarks, service marks, patents, trade names,
copyrights, licenses and similar rights necessary in the normal conduct
of its business, the loss or absence of which could have a Materially
Adverse Effect, and (iii) any strike, labor dispute, slow down or work
stoppage as described in Section 5.21;
(q) New Material Subsidiaries. Within 30 days after the
formation or acquisition of any Material Subsidiary, or any other event
resulting in the creation of a new Material Subsidiary, notice of the
formation or acquisition of such Material Subsidiary or such occurrence,
including a description of the assets of such entity, the activities in
which it will be engaged, and such other information as the Co-Agents may
request;
(r) Intercompany Asset Transfers. Promptly upon the
occurrence thereof, notice of the transfer of any assets from any Credit
Party to any other Consolidated Company that is not a Credit Party (in
any transaction or series of related transactions), excluding (i) sales
or other transfers of assets in the ordinary course of business, where
the Asset Value of such assets is greater than $5,000,000, and (ii) sales
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of accounts receivables or undivided ownership interests therein pursuant
to the terms of the Accounts Receivable Facilities.
(s) Asset Sales. At any time that the aggregate amount
of Asset Sales made by the Consolidated Companies after October 2, 1994
exceeds $10,000,000 (based on the Asset Values), prompt notice of any
additional Asset Sale or related series of Asset Sales involving Asset
Values of $1,000,000 or more; and
(t) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as any Co-Agent or
Lender may reasonably request from time to time.
Section 6.08. Financial Covenants.
(a) Working Capital. Maintain as of the last day of each
fiscal quarter Adjusted Working Capital of at least $110,000,000.
(b) Interest Coverage. Maintain as of the last day of
each fiscal quarter, calculated with respect to the immediately preceding
four fiscal quarters, an Interest Coverage Ratio not less than 2.25 to
1.00.
(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:
Maximum Funded
Debt Coverage
Period Ratio
------ --------------
December 30, 1996 through
June 29, 1997 4.75:1.00
June 30, 1997 and thereafter 4.50:1.00
(d) Senior Funded Debt to Total Capitalization. Maintain
as of the last day of each fiscal quarter a maximum ratio of Senior
Funded Debt to Total Capitalization, expressed as a percentage, of no
more than 50%.
(e) Leverage Ratio. Maintain as of the last day of each
fiscal quarter a maximum Leverage Ratio of sixty-five percent (65%).
(f) First Fiscal Quarter Calculations. Schedule 6.08
sets forth the calculation of the financial covenant amounts, ratios, and
percentages required by paragraphs (a) through (e) of this Section 6.08
calculated as the end of the first fiscal quarter of Interface's 1997
fiscal year.
Section 6.09. Notices Under Certain Other Indebtedness.
Immediately upon its receipt thereof, Interface shall furnish the Co-
Agents a copy of any notice received by it or any other Consolidated
Company from the holder(s) of Indebtedness referred to in
Section 7.01(b), (c), (e), (g), (i), (j) or (k) (or from any trustee,
agent, attorney, or other party acting on behalf of such holder(s)) in an
amount which, in the aggregate, exceeds $500,000, where such notice
states or claims (i) the existence or occurrence of any default or event
of default with respect to such Indebtedness under the terms of any
indenture, loan or credit agreement, debenture, note, or other document
evidencing or governing such Indebtedness, or (ii) with respect to any
Interface Control Debt, the existence or occurrence of any event or
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condition which requires or permits such holder(s) to exercise rights
under any Change in Control Provision. Interface agrees to take such ac-
tions as may be necessary to require the holder(s) of Interface Control
Debt (or any trustee or agent acting on their behalf) to furnish copies
of all such notices directly to the Co-Agents simultaneously with the
furnishing thereof to Interface, and that such requirement may not be
altered or rescinded without the prior written consent of the Co-Agents.
Section 6.10. Additional Credit Parties and Collateral.
Promptly after (i) the formation or acquisition of any Material Sub-
sidiary not listed on Schedule 5.13, (ii) the transfer of assets to any
Consolidated Company if notice thereof is required to be given pursuant
to Section 6.07(r) and as a result thereof the recipient of such assets
becomes a Material Subsidiary, (iii) the domestication of any Foreign
Subsidiary that is a Material Subsidiary, or (iv) the occurrence of any
other event creating a new Material Subsidiary (other than Interface SPC
which shall not be deemed to be a Material Subsidiary for the purposes of
this Section 6.10), Interface shall execute and deliver, and cause to be
executed and delivered (x) a Pledge Agreement (or, in the case of
Interface Heuga Singapore Pte Ltd. or Interface Heuga Hong Kong Ltd.,
amendments or supplements to the existing Pledge Agreement with respect
to the shares of such Subsidiary, or a new Pledge Agreement with respect
to such shares, as the Co-Agents may require pursuant to the advice of
their counsel) with respect to all capital stock of such Material
Subsidiary if it is not a Foreign Subsidiary, or 66% of the capital stock
of such Material Subsidiary if it is a Foreign Subsidiary directly owned
by Interface or a Subsidiary that is not, and is not directly or
indirectly controlled by, a Foreign Subsidiary, and (y) a Guaranty
Agreement from each such Material Subsidiary that is not a Foreign
Subsidiary, together with related documents of the kind described in
Section 4.01(c), (d), (f), (g), (h), and (r), all in form and substance
satisfactory to the Co-Agents.
Section 6.11. Accounts Receivable Facility. The Accounts
Receivable Facilities shall provide to Interface and those Subsidiaries
that are parties to the Receivables Transfer Agreements financing for
accounts receivable of an aggregate amount outstanding at any time not to
exceed $100,000,000.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Term Loan shall remain outstanding or any
Term Note or other Obligation shall remain unpaid, Interface will not and
will not permit any Subsidiary to:
Section 7.01. Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, other than:
(a) Indebtedness under this Agreement and the Credit
Agreement;
(b) The Senior Subordinated Notes, and other
Indebtedness outstanding on the Closing Date and described
on Schedule 7.01(b);
(c) purchase money Indebtedness to the extent
secured by a Lien permitted by Section 7.02(b) or 7.02(f);
(d) unsecured current liabilities (other than li-
abilities for borrowed money or liabilities evidenced by
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promissory notes, bonds or similar instruments) incurred
in the ordinary course of business and either (i) not more
than 90 days past due, or (ii) being disputed in good
faith by appropriate proceedings with reserves for such
disputed liability maintained in conformity with GAAP;
(e) Indebtedness incurred with respect to (i) the
letters of credit issued for the account of any
Consolidated Company pursuant to the Letter of Credit
Agreement, and (ii) unsecured letters of credit issued for
the account of any Consolidated Subsidiary in the ordinary
course of business in aggregate outstanding stated amounts
not to exceed $5,000,000;
(f) Indebtedness (other than liabilities for
borrowed money or liabilities evidenced by promissory
notes, bonds or similar instruments) permitted under
Section 7.02(c) or (d) or Section 7.06, or permitted under
Section 7.03 in connection with the purchase, lease or
other acquisition of property or assets where such
Indebtedness is to the seller of such property or assets
and represents a deferral of payment for such property or
assets for a period not to exceed the lesser of (i) normal
trade terms for such property or asset, or (ii) 180 days
(commencing from the date of delivery or, if applicable,
the date of installation of such property or asset);
(g) Subordinated Debt (other than the Senior
Subordinated Notes) in an aggregate principal amount not
to exceed $50,000,000;
(h) the Intercompany Loans described on
Schedule 5.20 and any other loans between Consolidated
Companies provided that (i) each loan or other extension
of credit made by a Guarantor to another Consolidated
Company that is not a Guarantor hereunder shall be made
payable on demand and shall not be subordinated to other
obligations of such Consolidated Company and all such
loans and extensions of credit shall not exceed
$35,000,000 in the aggregate at any one time outstanding
(excluding Intercompany Loans listed on Schedule 5.20 and
other Intercompany Loans made for the purpose of and used
reasonably concurrently for acquisitions permitted by Sec-
tion 7.03) unless otherwise agreed in writing by the
Required Lenders, (ii) each loan or other extension of
credit made to a Guarantor by another Consolidated Company
that is not a Guarantor hereunder shall be made on a
subordinated basis consistent with the subordinated
Intercompany Loans in existence on the date of this
Agreement and no portion of the principal amount thereof
shall be payable prior to the Final Maturity Date, and
(iii) such loans or other extensions of credit are
otherwise permitted pursuant to the limitations of Section
7.05(c);
(i) Indebtedness under the Interest Rate Contract(s)
and Currency Contract(s) required to be maintained
pursuant to the Credit Agreement, or other Currency
Contracts entered into in the ordinary course of business
consistent with past practices;
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(j) Unsecured lines of credit, revolving credit, and
overdraft credit facilities described on Schedule 7.01(j),
and each extension, renewal, and replacement of such
credit facilities for principal amounts not in excess of
the respective principal amounts shown on
Schedule 7.01(j), and having maturities in each case not
longer than two (2) years with annual renewals thereafter;
(k) Indebtedness, if any, owing by Interface or
Interface SPC pursuant to the Accounts Receivable
Facilities and Indebtedness, if any, owing by any other
Consolidated Company party to the Receivables Transfer
Agreements with respect thereto;
(l) Indebtedness in an aggregate principal amount
not to exceed $15,000,000 under the Distributor Credit
Facilities (including, without limitation, Indebtedness
arising from any Guaranty by Interface or its Subsidiaries
required to be given in respect of a portion of the
Distributor Credit Facilities in connection with the
acquisition of ownership interests in any retail
distributor), together with any extensions or renewals of
such Distributor Credit Facilities to the extent that such
extensions or renewals do not increase the respective
principal amounts that may be outstanding under such
Distributor Credit Facilities; and
(m) other Indebtedness not to exceed $15,000,000 at any
one time outstanding.
Section 7.02. Liens. Create, incur, assume or suffer to
exist any Lien on any of its property now owned or hereafter acquired to
secure any Indebtedness other than:
(a) Liens existing on the date hereof disclosed
on Schedule 7.02;
(b) any Lien on any property securing
Indebtedness incurred or assumed for the purpose of
financing all or any part of the acquisition cost of such
property, provided that such Lien does not extend to any
other property, and provided further that the aggregate
amount of Indebtedness secured by all such Liens at any
time does not exceed $10,000,000;
(c) Liens for taxes not yet due, and Liens for
taxes or Liens imposed by ERISA which are being contested
in good faith by appropriate proceedings and with respect
to which adequate reserves are being maintained;
(d) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being
maintained;
(e) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
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statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-
money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(f) Liens (other than those permitted by
paragraphs (a) through (e) of this Section 7.02)
encumbering assets having an Asset Value not greater than
$2,000,000 in the aggregate;
(g) Liens (i) in favor of the Collateral Agent
securing the Obligations hereunder and the "Obligations"
as defined in the Credit Agreement, and (ii) securing
Indebtedness under the Interest Rate Contract and Currency
Contract required to be maintained pursuant to the Credit
Agreement (which Liens may be pari passu with the Liens
in favor of the Co-Agents and Lenders securing the Ob-
ligations hereunder and the "Obligations" as defined in
the Credit Agreement, provided that the properties and
assets subject to such Liens, and the terms and conditions
of all agreements and instruments granting or relating to
such Liens, shall be subject to the prior written approval
of the Co-Agents);
(h) Liens on any property included in the "IRB Col-
lateral" as may be approved by the Collateral Agent
pursuant to the terms of the Letter of Credit Agreement;
and
(i) Liens, if any, that may be deemed to have been
granted by any Consolidated Company in favor of SPARCC,
the Bank Purchasers or their respective agents, on
accounts receivable and related property of such
Consolidated Companies as a result of the sale and
assignment thereof (or of undivided ownership interests
therein) to SPARCC, the Bank Purchasers or their
respective agents pursuant to the Accounts Receivable
Facilities.
Section 7.03. Mergers, Acquisitions, Sales, Etc. Merge
or consolidate with any other Person, or sell, lease, or otherwise
dispose of its accounts, property or other assets (including capital
stock of Subsidiaries), or purchase, lease or otherwise acquire all or
any substantial portion of the property or assets (including capital
stock) of any Person; provided, however, that the foregoing restrictions
shall not be applicable to (i) sales of equipment or other personal
property being replaced by other equipment or other personal property
purchased as a Capital Expenditure item, (ii) other Asset Sales (but
excluding Asset Sales occurring as part of any sale and leaseback
transactions permitted by Section 7.06) where, on the date of execution
of a binding obligation to make such Asset Sale (provided that if the
Asset Sale is not consummated within six (6) months of such execution,
then on the date of consummation of such Asset Sale rather than on the
date of execution of such binding obligation), the Asset Value of Asset
Sales occurring after October 2, 1994, taking into account the Asset
Value of the proposed Asset Sale, would not exceed (A) during any fiscal
quarter where Interface's Leverage Ratio for the preceding fiscal quarter
is equal to or greater than 50%, $25,000,000 in the aggregate, (B) during
any fiscal quarter where Interface's Leverage Ratio for the preceding
fiscal quarter is less than 50% but equal to or greater than 35%,
$50,000,000 in the aggregate, and (C) during any fiscal quarter where
Interface's Leverage Ratio for the preceding fiscal quarter is less than
35%, an unlimited amount, and in any such case where the Net Proceeds of
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any such Asset Sale are applied to the extent required by Section 2.03,
(iii) sales of inventory in the ordinary course of business, (iv) sales
of accounts receivable (or of undivided ownership interests therein)
pursuant to the Accounts Receivable Facilities as along as the total
"Investment" of the purchasers party to the Receivables Backup Purchase
Agreements and the Receivable Sale Agreements (as such term is defined in
each such agreement) shall not exceed $100,000,000 in aggregate amount
outstanding at any time, (v) purchases or other acquisitions of all or
any substantial portion of the property or assets of any Person
(including capital stock) during any fiscal year, provided that such
transactions (x) have been approved in advance by a majority of the board
of directors of the seller, and (y) have been demonstrated to the
satisfaction of the Co-Agents, through the preparation and delivery by
Interface to the Lenders prior to the execution of a contractual
obligation to make such purchase, of pro forma financial statements
demonstrating the effect of such transaction (in such detail and using
such form of presentation of historical and forecasted financial infor-
mation as may be satisfactory to the Co-Agents), not to adversely affect
the continued compliance of the Consolidated Companies with the terms of
this Agreement, (vi) Asset Sales occurring as part of any sale and
leaseback transactions permitted pursuant to Section 7.06, or (vii) The
1996 Reorganization Transactions; provided, however, that no transaction
pursuant to clauses (i), (ii), (v) or (vi) above shall be permitted if
any Default or Event of Default otherwise exists at the time of such
transaction or would otherwise exist as a result of such transaction.
Section 7.04. Dividends, Etc. Interface shall not de-
clare or pay any dividend on its capital stock, or make any payment to
purchase, redeem, retire or acquire any of its Subordinated Debt or
capital stock or any option, warrant, or other right to acquire such
Subordinated Debt or capital stock, other than:
(i) dividends payable solely in shares of
capital stock;
(ii) payments made by Interface to repurchase
any shares of Class A Common Stock of Interface
previously delivered as a portion of the
consideration paid in the Prince Street Acquisition,
as may be provided in the Prince Street Acquisition
Agreement; and
(iii) cash dividends declared and paid, and all
other such payments made, after December 29, 1991
(but excluding any payments made pursuant to clause
(ii) above) in an aggregate amount at any time not to
exceed (x) $10,000,000, plus (y) fifty percent (50%)
of Consolidated Net Income (or minus one hundred
percent (100%) of Consolidated Net Loss) earned dur-
ing Interface's 1992 fiscal year and thereafter (such
period to be treated as one accounting period);
provided, however, no such payment may be made pursuant to clause (ii)
above, and no such dividend or other payment may be paid or made pursuant
to clause (iii) above, unless (x) the full amount of the mandatory
prepayment required by Section 2.03(b) has been made, and (y) no Default
or Event of Default exists at the time of such declaration or payment, or
would exist as a result of such declaration or payment. Nothing in this
Section 7.04 shall prevent the conversion of the Convertible Preferred
Stock into the common stock of Interface.
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Section 7.05. Investments, Loans, Etc. Make, permit or
hold any Investments in any Person, or otherwise acquire or hold any
Subsidiaries, other than:
(a) Investments in Subsidiaries that are Guarantors
under this Agreement and Investments by Interface in
Interface SPC in the form of the Receivables Subordinated
Notes;
(b) Investments made and simultaneously used for the
acquisition of the capital stock of any Person, or all or
any substantial portion of the property or assets of any
Person, in an acquisition permitted pursuant to
Section 7.03;
(c) Investments in Subsidiaries, other than those
Subsidiaries that are Guarantors under this Agreement,
made after October 2, 1994, in an aggregate amount not to
exceed $35,000,000 unless otherwise consented to in
writing by the Required Lenders; provided, however, that
no Investment may be made at any time that a Default or
Event of Default has occurred and is continuing or would
exist as a result of such Investment;
(d) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United
States or any agency thereof, in each case supported by
the full faith and credit of the United States and
maturing within one year from the date of creation
thereof;
(e) commercial paper maturing within one year from
the date of creation thereof rated in the highest grade by
a nationally recognized credit rating agency;
(f) time deposits maturing within one year from the
date of creation thereof with, including certificates of
deposit issued by, any office located in the United States
of any bank or trust company which is organized under the
laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at
least $500,000,000, including without limitation, any such
deposits in Eurodollars issued by a foreign branch of any
such bank or trust company;
(g) Investments made by Plans and Foreign Plans; and
(h) Investments (other than those permitted by para-
graphs (a) through (g) above) in an aggregate amount not
to exceed an amount equal to 15% of Interface's
Consolidated Net Worth.
Section 7.06. Sale and Leaseback Transactions. Sell or
transfer any property, real or personal, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property
which any Consolidated Company intends to use for substantially the same
purpose or purposes as the property being sold or transferred, except for
such transactions occurring after the date of this Agreement (i) with
respect to properties first acquired by any of the Consolidated Companies
after the date of this Agreement with the intent at the time of such
acquisition that such properties be the subjects of such transactions,
and such transactions are actually consummated within 60 days after the
initial acquisition of such properties, so long as the Asset Values of
such properties do not exceed $25,000,000 in the aggregate, and (ii) with
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respect to all other properties in all such transactions, so long as the
Asset Values of such other properties do not exceed $5,000,000 in the
aggregate.
Section 7.07. Transactions with Affiliates.
(a) Enter into any material transaction or series of
related transactions which in the aggregate would be material, whether or
not in the ordinary course of business, with any Affiliate of any
Consolidated Company (but excluding any Affiliate which is also a
Consolidated Company), other than on terms and conditions substantially
as favorable to such Consolidated Company as would be obtained by such
Consolidated Company at the time in a comparable arm's-length transaction
with a Person other than an Affiliate.
(b) Convey or transfer to any other Person (including any
other Consolidated Company) any real property, buildings, or fixtures
used in the manufacturing or production operations of any Consolidated
Company, or convey or transfer to any other Consolidated Company any
other assets (excluding conveyances or transfers in the ordinary course
of business) if at the time of such conveyance or transfer any Default or
Event of Default exists or would exist as a result of such conveyance or
transfer.
Section 7.08. Optional Prepayments. Directly or indi-
rectly, prepay, purchase, redeem, retire, defease or otherwise acquire,
or make any optional payment on account of any principal of, interest on,
or premium payable in connection with the optional prepayment, redemption
or retirement of, any of its Indebtedness, or give a notice of redemption
with respect to any such Indebtedness, or make any payment in violation
of the subordination provisions of any Subordinated Debt, except with
respect to (i) the Obligations under this Agreement and the Term Notes,
and Indebtedness arising under the Credit Agreement, (ii) redemptions,
purchases or other acquisition of the Subordinated Debentures as
previously permitted under the Credit Agreement, (iii) prepayments of
Indebtedness outstanding pursuant to revolving credit, overdraft and line
of credit facilities permitted pursuant to Section 7.01, (iv) permitted
prepayments of Indebtedness incurred in connection with industrial
revenue bonds upon the occurrence of a determination of an event of
taxability entitling the holder(s) thereof to receive a higher rate of
interest, (v) Intercompany Loans made or outstanding pursuant to
Section 7.01(h)(i) where demand for payment has been made in accordance
with Section 7.13, and (vi) Intercompany Loans made or outstanding
pursuant to Section 7.01(h)(ii) upon the prior written consent of the Co-
Agents.
Section 7.09. Changes in Business. Enter into any
business which is substantially different from that presently conducted
by the Consolidated Companies taken as a whole, except where the
aggregate Investment made, and other funds expended or committed, with
respect to such business does not exceed $7,500,000.
Section 7.10. ERISA. Take or fail to take any action
with respect to any Plan or Foreign Plan of any Consolidated Company or,
with respect to its ERISA Affiliates, any Plans which are subject to
Title IV of ERISA or to continuation health care requirements for group
health plans under the Tax Code, including without limitation
(i) establishing any such Plan, (ii) amending any such Plan (except where
required to comply with applicable law), (iii) terminating or withdrawing
from any such Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, or any
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withdrawal liability under Title IV of ERISA with respect to any such
Plan, or any unfunded liabilities under any Foreign Plan, without first
obtaining the written approval of the Required Lenders, where such
actions or failures could result in a Material Adverse Effect.
Section 7.11. Additional Negative Pledges. Create or
otherwise cause or suffer to exist or become effective, directly or
indirectly, any prohibition or restriction on the creation or existence
of any Lien upon any asset of any Consolidated Company, other than
pursuant to (i) Section 7.02, (ii) the terms of any agreement, instrument
or other document pursuant to which any Indebtedness permitted by
Section 7.02(b) or 7.02(g) is incurred by any Consolidated Company, so
long as such prohibition or restriction applies only to the property or
asset being financed by such Indebtedness, (iii) any requirement of
applicable law or any regulatory authority having jurisdiction over any
of the Consolidated Companies; and (iv) the terms of the Accounts
Receivable Facilities with respect to the accounts receivable and related
property transferred thereunder and the stock and other assets of
Interface SPC.
Section 7.12. Limitation on Payment Restrictions Af-
fecting Consolidated Companies. Create or otherwise cause or suffer to
exist or become effective, any consensual encumbrance or restriction on
the ability of any Consolidated Company to (i) pay dividends or make any
other distributions on such Consolidated Company's stock, other than the
restrictions on payment of dividends on Interface's common stock imposed
in connection with the Convertible Preferred Stock, or (ii) pay any
indebtedness owed to Interface or any other Consolidated Company, or
(iii) transfer any of its property or assets to Interface or any other
Consolidated Company, except any consensual encumbrance or restriction
existing under the Credit Documents or the Credit Agreement.
Notwithstanding the foregoing, nothing in this Section 7.12 shall be
deemed to prohibit restrictions on dividends and distributions payable by
Interface SPC, set forth in, or required by, the terms of any document
executed in connection with the Accounts Receivable Facilities.
Section 7.13. Actions Under Certain Documents. Without
the prior written consent of the Co-Agents (which consent shall not be
unreasonably withheld), modify, amend, cancel or rescind the Intercompany
Loans or Intercompany Loan Documents, or Subordinated Debt or any
agreements or documents evidencing or governing Subordinated Debt (except
that a loan between Consolidated Companies as permitted by
Section 7.01(h) may be modified or amended so long as it otherwise
satisfies the requirements of clause (ii) of Section 7.01(h)), or make
demand of payment or accept payment on any Intercompany Loans permitted
by Section 7.01(h)(ii), except that current interest accrued thereon as
of the date of this Agreement and all interest subsequently accruing
thereon (whether or not paid currently) may be paid unless an Event of
Default has occurred and is continuing. In addition to the foregoing,
without the prior consent of the Co-Agents, the Consolidated Companies
shall not enter into any amendment or modification of the documents
executed in connection with the Accounts Receivable Facilities which
changes the definition of "Investment" or "Event of Termination" used
therein or any other material provision thereof.
Section 7.14. Designated Senior Indebtedness. Without
the prior written consent of the Co-Agents, cause any Indebtedness of
Interface or any of its Subsidiaries, other than Indebtedness owing under
the Credit Agreement, to become "Designated Senior Indebtedness" as
provided in the Senior Subordinated Notes Indenture.
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ARTICLE VIII.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of
the following specified events (each an "Event of Default"):
Section 8.01. Payments. Interface shall fail to make
promptly when due (including, without limitation, by mandatory
prepayment) any principal payment with respect to the Term Loans, or
Interface shall fail to make within five (5) days after the due date
thereof any payment of interest, fee or other amount payable hereunder;
Section 8.02. Covenants Without Notice. Interface shall
fail to observe or perform any covenant or agreement contained in
Sections 6.07(g), 6.08, 6.11, 7.01 through 7.06, 7.08, 7.09, and 7.11
through 7.14;
Section 8.03. Other Covenants. Interface shall fail to
observe or perform any covenant or agreement contained in this Agreement,
other than those referred to in Sections 8.01 and 8.02, and, if capable
of being remedied, such failure shall remain unremedied for 25 days after
the earlier of (i) Interface's obtaining knowledge thereof, or
(ii) written notice thereof shall have been given to Interface by any
Co-Agent or Lender;
Section 8.04. Representations. Any representation or
warranty made or deemed to be made by Interface or any other Credit Party
or by any of its officers under this Agreement or any other Credit
Document (including the Schedules attached thereto), or any certificate
or other document submitted to the Agents or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit
Document, shall be incorrect in any material respect when made or deemed
to be made or submitted;
Section 8.05. Non-Payments of Other Indebtedness. Any
Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving
effect to any applicable grace period) any payment of principal of or
interest on any Indebtedness (other than the Obligations) exceeding
$2,500,000 in the aggregate;
Section 8.06. Defaults Under Other Agreements. Any
Consolidated Company shall fail to observe or perform within any
applicable grace period any covenants or agreements contained in any
agreements or instruments relating to any of its Indebtedness exceeding
$2,500,000 in the aggregate, or any other event shall occur if the effect
of such failure or other event is to accelerate, or to permit the holder
of such Indebtedness or any other Person to accelerate, the maturity of
such Indebtedness; or any such Indebtedness shall be required to be
prepaid (other than by a regularly scheduled required prepayment) in
whole or in part prior to its stated maturity;
Section 8.07. Bankruptcy. Interface or any other Ma-
terial Company shall commence a voluntary case concerning itself under
the Bankruptcy Code or applicable foreign bankruptcy laws; or an
involuntary case for bankruptcy is commenced against any Material Company
and the petition is not controverted within 10 days, or is not dismissed
within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) or similar official under applicable
foreign bankruptcy laws is appointed for, or takes charge of, all or any
substantial part of the property of any Material Company; or any
Material Company commences proceedings of its own bankruptcy or to be
granted a suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
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dissolution, insolvency or liquidation or similar law of any jurisdic-
tion, whether now or hereafter in effect, relating to any Material
Company or there is commenced against any Material Company any such
proceeding which remains undismissed for a period of 60 days; or any
Material Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered;
or any Material Company suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Material Company
makes a general assignment for the benefit of creditors; or any Material
Company shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or any
Material Company shall call a meeting of its creditors with a view to ar-
ranging a composition or adjustment of its debts; or any Material Company
shall by any act or failure to act indicate its consent to, approval of
or acquiescence in any of the foregoing; or any corporate action is taken
by any Material Company for the purpose of effecting any of the
foregoing;
Section 8.08. ERISA. A Plan or Foreign Plan of a Con-
solidated Company or a Plan subject to Title IV of ERISA of any of its
ERISA Affiliates
(i) shall fail to be funded in accordance with the
minimum funding standard required by applicable law, the
terms of such Plan or Foreign Plan, Section 412 of the Tax
Code or Section 302 of ERISA for any plan year or a waiver
of such standard is sought or granted with respect to such
Plan or Foreign Plan under applicable law, the terms of
such Plan or Foreign Plan or Section 412 of the Tax Code
or Section 303 of ERISA; or
(ii)is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan or
Foreign
Plan; or
(iii) shall require a Consolidated Company to provide
security under applicable law, the terms of such Plan or Foreign Plan,
Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or
(iv)results in a liability to a Consolidated Company under
applicale law, the terms of such Plan or Foreign Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or
other event a liability to the PBGC (or any similar Person with respect
to any Foreign Plan) or a Plan that would have a Materially Adverse
Effect.
Section 8.09. Money Judgment. A judgment or order for
the payment of money in excess of $2,500,000 or otherwise having a
Materially Adverse Effect shall be rendered against Interface or any
other Material Company and such judgment or order shall continue
unsatisfied (in the case of a money judgment) and in effect for a period
of 30 days during which execution shall not be effectively stayed or
deferred (whether by action of a court, by agreement or otherwise);
Section 8.10. Change in Control of Interface. (i) Any
Change in Control shall occur or exist, or (ii) any event or condition
shall occur or exist which, pursuant to the terms of any Change in
Control Provision, requires or permits the holder(s) of Interface Control
Debt to require that such Interface Control Debt be redeemed,
repurchased, defeased, prepaid or repaid, in whole or in part, or the
maturity of such Interface Control Debt to be accelerated in any respect;
provided, however, that no Event of Default hereunder shall be deemed to
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exist upon the occurrence of any event or condition described in the
foregoing clauses (i) or (ii) until thirty (30) days after the first
occurrence or existence of such event or condition;
Section 8.11. Default Under Other Credit Documents.
There shall exist or occur any "Event of Default" as provided under the
terms of any other Credit Document, or any Credit Document ceases to be
in full force and effect or the validity or enforceability thereof is
disaffirmed by or on behalf of Interface or any other Credit Party, or at
any time it is or becomes unlawful for Interface or any other Credit
Party to perform or comply with its obligations under any Credit
Document, or the obligations of Interface or any other Credit Party under
any Credit Document are not or cease to be legal, valid and binding on
Interface or any such Credit Party;
Section 8.12. Default Under Interest Rate Contract or
Currency Contract. Any event or condition shall occur or exist which
causes, or permits any party thereto (other than the Consolidated Company
or Companies party thereto) to cause, the termination or cancellation of
any Interest Rate Contract or Currency Contract (excluding any termi-
nation or cancellation effected at the option of Interface in the
exercise of Interface's business judgment or any other termination or
cancellation of such Interest Rate Contract or Currency Contract not
resulting from any breach of such agreement or default thereunder by any
Consolidated Company or Companies), and as a result of such cancellation
or termination, any of the Consolidated Companies would be required to
make net payments thereunder in excess of $2,500,000 in the aggregate;
Section 8.13. Attachments. An attachment or similar
action shall be made on or taken against any of the assets of any
Consolidated Company with an Asset Value exceeding $5,000,000 in
aggregate and is not removed within 90 days of the same being made;
Section 8.14. Accounts Receivable Facility. There shall
exist and continue for five (5) days any "Event of Termination" as
provided under the terms of any of the Receivables Backup Purchase
Agreements or the Receivables Sale Agreements (collectively, the
"Receivables Securitization Agreements") other than an Event of
Termination which arises from: (i) the matters described in subsection
12.1(f) of the Receivables Securitization Agreements; (ii) any reduction
in Interface's credit rating (or the imputed equivalent thereof);
(iii) the operation of a cross-termination provision in such Receivables
Securitization Agreements (that is, a provision in such Receivables
Securitization Agreements under which the occurrence of any "Event of
Termination" under any other Receivables Securitization Agreement is also
an Event of Termination under such Receivables Securitization Agreements)
which is not otherwise an Event of Default hereunder; (iv) any
Consolidated Company's failure to comply with, or its making of any
changes in or supplements to, its credit and collection policies; (v) any
failure by Interface to maintain the minimum net worth required in
Interface SPC under the terms of such Receivables Securitization
Agreements; (vi) any amendment of the terms of any Consolidated Company's
accounts receivable or any contract relating thereto or any waiver by
such Consolidated Company of the terms and conditions of such contract;
(vii) any change in the character of the business of any of the
Consolidated Companies (which is not a violation of Section 7.09 hereof)
or in their respective credit and collection policies; (viii) Interface
SPC's entering into or becoming a party to any agreement or instruments
incidental to its administration or operation other than those expressly
permitted under the terms of such Receivables Securitization Agreement;
(ix) any determination that the payment by Interface SPC to any of the
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Consolidated Companies of 100% of the net book value of the accounts
receivable does not constitute the "reasonably equivalent value" of the
accounts receivable and related rights sold by such Consolidated Company
to Interface SPC in connection with the Accounts Receivable Facilities;
(x) any change in the Certificate of Incorporation or By-Laws of
Interface SPC; (xi) any failure by Interface SPC or Interface to comply
with any of the affirmative or negative covenants in such Receivables
Securitization Agreement which relate to the establishment and
maintenance of Interface SPC's separate legal identity; (xii) the past-
due or defaulted accounts receivable of any or all of the Consolidated
Companies exceeding any applicable limitations set forth in such
Receivables Securitization Agreement; (xiii) the aggregate "Dilutions"
(as such term is defined in such Receivables Securitization Agreement) on
any or all of the Consolidated Companies' accounts receivable exceeding
any applicable limitation set forth in such Receivables Securitization
Agreement; or (xiv) the "Portfolio Turnover" (as such term is used in
such Receivables Securitization Agreement) exceeding any applicable
limitation set forth in such Receivables Securitization Agreement; or
Section 8.15. Credit Agreement. There shall exist or
occur any "Event of Default" as provided under the terms of the Credit
Agreement.
ARTICLE IX.
THE CO-AGENTS; COLLATERAL AGENT
Section 9.01 Appointment of Co-Agents. Each Lender
hereby designates (i) STBA as Administrative Agent to administer all
matters concerning the Term Loans and to act as herein specified, and
(ii) FNBC as Co-Agent to act as herein specified. Each Lender hereby ir-
revocably authorizes, and each holder of any Term Note by the acceptance
of a Term Note shall be deemed irrevocably to authorize, the Co-Agents to
take such actions on its behalf under the provisions of this Agreement,
the other Credit Documents, and all other instruments and agreements
referred to herein or therein, and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of such Co-Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Co-Agents may perform
any of their duties hereunder by or through their agents or employees.
Section 9.02. Appointment of Collateral Agent. (a) Each
Co-Agent and each Lender hereby designates STBA as Collateral Agent and
hereby authorizes the Collateral Agent to enter into each of the Security
Documents substantially in the form attached hereto, and to take all
action contemplated thereby. All rights and remedies under the Security
Documents may be exercised by the Collateral Agent for the benefit of the
Co-Agents and the Lenders and the other beneficiaries thereof upon the
terms thereof. The Co-Agents and the Lenders further agree that the
Collateral Agent may assign its rights and obligations as Collateral
Agent under any of the Security Documents to any affiliate of the
Collateral Agent or to any trustee, which assignee in each such case
shall (subject to compliance with any requirements of applicable law
governing the assignment of such Security Documents) be entitled to all
the rights of the Collateral Agent under and with respect to the ap-
plicable Security Document.
(b) In each circumstance where, under any provision of
any Security Document, the Collateral Agent shall have the right to grant
or withhold any consent, exercise any remedy, make any determination or
direct any action by the Collateral Agent under such Security Document,
the Collateral Agent shall act in respect of such consent, exercise of
remedies, determination or action, as the case may be, with the consent
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of and at the direction of the Required Lenders; provided, however, that
no such consent of the Required Lenders shall be required with respect to
any consent, determination or other matter that is, in the Collateral
Agent's judgment, ministerial or administrative in nature; provided, fur-
ther, that in no event shall the Collateral Agent be required, and in all
cases shall be fully justified in failing or refusing, to take any action
under or pursuant to any Security Document which, in the reasonable
opinion of the Collateral Agent, (a) would be contrary to the terms of
any Security Document or would subject it or its officers, employees, or
directors to liability, unless and until the Collateral Agent shall be
indemnified or tendered security to its satisfaction by the Lenders
against any and all loss, cost, expense or liability in connection
therewith, or (b) would be contrary to law, in each case anything herein
or elsewhere contained to the contrary notwithstanding. In each cir-
cumstance where any consent of or direction from the Required Lenders is
required, the Collateral Agent shall send to the Lenders a notice setting
forth a description in reasonable detail of the matter as to which
consent or direction is requested and the Collateral Agent's proposed
course of action with respect thereto. In the event the Collateral Agent
shall not have received a response from any Lender within five (5)
Business Days after such Lender's receipt of such notice, such Lender
shall be deemed to have agreed to the course of action proposed by the
Collateral Agent.
Section 9.03. Nature of Duties of Agents. The Agents
shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Credit Documents. None of the
Agents nor any of their respective officers, directors, employees or
agents shall be liable for any action taken or omitted by it as such
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agents shall be
ministerial and administrative in nature; the Agents shall not have by
reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, express or implied, is intended to
or shall be so construed as to impose upon the Agents any obligations in
respect of this Agreement or the other Credit Documents except as ex-
pressly set forth herein.
Section 9.04. Lack of Reliance on the Agents.
(a) Independently and without reliance upon the Agents,
each Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of the Credit Parties in connection with the taking
or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of the Credit Parties, and, except as
expressly provided in this Agreement, the Agents shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of any Term Loans or at any
time or times thereafter.
(b) The Agents shall not be responsible to any Lender for
any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of this
Agreement, the Term Notes, the Guaranty Agreements, the Pledge
Agreements, or any other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or be required to make any
inquiry concerning either the performance or observance of any of the
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terms, provisions or conditions of this Agreement, the Term Notes, the
Guaranty Agreements, the Pledge Agreements, or the other documents
contemplated hereby or thereby, or the financial condition of the Credit
Parties, or the existence or possible existence of any Default or Event
of Default; provided, however, to the extent the Agents have been advised
that a Lender has not received any information formally delivered to the
Agents pursuant to Section 6.07, the Agents shall deliver or cause to be
delivered such information to such Lender.
Section 9.05. Certain Rights of the Agents. If any Agent
shall request instructions from the Required Lenders with respect to any
action or actions (including the failure to act) in connection with this
Agreement, such Agent shall be entitled to refrain from such act or
taking such act, unless and until the Agent shall have received
instructions from such Lenders; and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against
any Agent as a result of such Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Lenders
where required by the terms of this Agreement.
Section 9.06. Reliance by Agents. The Agents shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cable gram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person. The
Agents may consult with legal counsel (including counsel for any Credit
Party), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants
or experts.
Section 9.07. Indemnification of Agents. To the extent
the Agents are not reimbursed and indemnified by the Credit Parties, each
Lender will reimburse and indemnify each Agent, ratably according to the
respective principal amounts of the Term Loans outstanding by each
Lender, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against such
Agent in performing its duties hereunder, in any way relating to or
arising out of this Agreement or the other Credit Documents; provided
that no Lender shall be liable to any Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent's gross
negligence or willful misconduct.
Section 9.08. The Agents in their Individual Capacity.
With respect to its obligation to lend under this Agreement, the Term
Loans made by it and the Term Notes issued to it, each Agent shall have
the same rights and powers hereunder as any other Lender or holder of a
Term Note and may exercise the same as though it were not performing the
duties specified herein; and the terms "Lenders", "Required Lenders",
"holders of Term Notes", or any similar terms shall, unless the context
clearly otherwise indicates, include each of the Agents in its individual
capacity. The Agents may accept deposits from, lend money to, and
generally engage in any kind of banking, trust, financial advisory or
other business with the Consolidated Companies or any affiliate of the
Consolidated Companies as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Consolidated
Companies for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
- 66 -<PAGE>
Section 9.09. Holders of Term Notes. The Agents may deem
and treat the payee of any Term Note as the owner thereof for all pur-
poses hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agents. Any request,
authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Term
Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Term Note or of any Term Note or Notes issued in
exchange therefor.
Section 9.10. Successor Agents.
(a) Any Agent may resign at any time by giving written
notice thereof to the Lenders and Interface and may be removed at any
time with or without cause by the Required Lenders; provided, however,
the Collateral Agent may not resign or be removed except where the
Collateral Agent is also resigning or being removed and a successor
Collateral Agent has been appointed under this Agreement and the Credit
Agreement and shall have accepted such appointment. Upon any such
resignation or removal, the Required Lenders shall have the right, upon
five days' notice to Interface, to appoint a successor Agent; provided,
however, that no Person shall be appointed as a successor Collateral
Agent by the Required Lenders unless such Person is simultaneously being
appointed as Collateral Agent under the Credit Agreement. If no suc-
cessor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Required Lenders' removal
of the retiring Agent, then, upon five days' notice to Interface, the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall (i) be a bank which maintains an office in the United States,
or a commercial bank organized under the laws of the United States of
America or any State thereof, or any Affiliate of such bank, having a
combined capital and surplus of at least $100,000,000, and (ii) in the
case of a successor Collateral Agent, simultaneously be appointed as
Collateral Agent under the Credit Agreement.
(b) Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article IX shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was an Agent under this Agreement.
Section 9.11. Interests of FNBC and its Affiliates. Each
of the Lenders confirms and acknowledges that FNBC has advised it that
FNBC has engaged in other transactions with, and performed financial
advisory services for, Interface, and further that certain affiliates of
FNBC and a partnership comprised of employees of an FNBC affiliate
maintain ownership interests in Bentley, as follows: (i) FNBC is party
to certain interest rate and currency exchange swap agreements and
forward rate agreements with one or more of the Consolidated Companies,
(ii) FNBC, through its Mergers and Acquisitions Group, served as
financial advisor to Interface in connection with the Bentley
Acquisition, (iii) prior to the Bentley Acquisition, First Chicago
Investment Corporation, First Capital Corporation of Chicago, and a
partnership comprised of certain employees of First Capital Corporation
of Chicago (collectively, the "FNBC Affiliates") owned, in the aggregate,
a majority of the capital stock of Bentley, and (iv) prior to the Bentley
Acquisition, the FNBC Affiliates elected a majority of the members of the
Bentley board of directors, including the member designated by the
- 67 -<PAGE>
Bentley board of directors to negotiate the sale of Bentley to Interface.
The FNBC Affiliates own a majority of the preferred stock issued by
Interface as a portion of the purchase price for Bentley, and FNBC may
continue to engage in other transactions with, and perform financial
advisory services for, Interface and other Consolidated Companies. None
of the foregoing relationships or ownership interests shall preclude FNBC
from serving as Co-Agent hereunder or from exercising all rights,
privileges and remedies of a Lender under this Agreement without regard
to such relationships or ownership interests.
ARTICLE X.
MISCELLANEOUS
Section 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, telecopy or similar teletransmission or writing) and shall
be given to such party at its address or applicable teletransmission
number set forth on the signature pages hereof, or such other address or
applicable teletransmission number as such party may hereafter specify by
notice to the Co-Agents and Interface. Each such notice, request or
other communication shall be effective (i) if given by telex, when such
telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate confirmation is received, or (iv) if given by
any other means (including, without limitation, by air courier), when
delivered or received at the address specified in this Section; provided
that notices to the Co-Agents shall not be effective until received.
Section 10.02. Amendments, Etc. No amendment or waiver
of any provision of this Agreement or the other Credit Documents, nor
consent to any departure by any Credit Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders do any of the following: (i) waive any of
the conditions specified in Section 4.01, (ii) increase the Term Loan
Commitments or other contractual obligations to Interface under this
Agreement, (iii) reduce the principal of, or interest on, the Term Notes
or any fees hereunder, (iv) postpone any date fixed for the payment in
respect of principal of, or interest on, the Term Notes or any fees
hereunder, (v) change the percentage of the Term Loan Commitments or of
the aggregate unpaid principal amount of the Term Notes, or the number
or identity of Lenders which shall be required for the Lenders or any of
them to take any action hereunder, (vi) agree to release any of the
Pledged Stock from the Lien of the Security Documents to the extent
securing the Obligations or to release any Guarantor from its obligations
under any Guaranty Agreement (provided, that no agreement to any such
release shall be required from any Lenders in connection with the
transactions described in the proviso set forth in the definition of
"Pledged Stock" or in connection with a sale of Pledged Stock that is
made at a time when Interface has satisfied the requirements set forth in
Section 7.03(ii)(C) with respect to such sale), or (vii) amend this
Section 10.02 or Section 10.06. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the
Co-Agents or the Collateral Agent, as the case may be, in addition to the
- 68 -<PAGE>
Lenders required hereinabove to take such action, affect the rights or
duties of the Co-Agents or the Collateral Agent, as the case may be,
under this Agreement or under any other Credit Document.
Section 10.03. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Co-Agents, the Collateral Agent, any
Lender or any holder of a Term Note in exercising any right or remedy
hereunder or any other Credit Document, and no course of dealing between
any Credit Party and the Co-Agents, the Collateral Agent, any Lender or
the holder of any Term Note shall operate as a waiver thereof, nor shall
any single or partial exercise of any right or remedy hereunder or any
other Credit Document preclude any other or further exercise thereof or
the exercise of any other right or remedy hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies which the Co-Agents, the Collateral
Agent, any Lender or the holder of any Term Note would otherwise have.
No notice to or demand on any Credit Party not required hereunder or any
other Credit Document in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Co-Agents, the Collateral
Agent, the Lenders or the holder of any Term Note to any other or further
action in any circumstances without notice or demand.
Section 10.04. Payment of Expenses, Etc. Interface
shall:
(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable, out-of-
pocket costs and expenses of the Agents in the
administration (both before and after the execution hereof
and including advice of counsel as to the rights and
duties of the Agents and the Lenders with respect thereto)
of, and in connection with the preparation, execution and
delivery of, preservation of rights under, enforcement of,
and, after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement and the
other Credit Documents and the documents and instruments
referred to therein, and any amendment, waiver or consent
relating thereto (including, without limitation, the
reasonable fees and disbursements of counsel for the
Agents), and in the case of enforcement of this Agreement
or any Credit Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees and disbursements
of counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the
applicable provisions of Section 3.07(b), pay and hold
each of the Lenders harmless from and against any and all
present and future stamp, documentary, and other similar
Taxes with respect to this Agreement, the Term Notes, and
any other Credit Documents, any collateral described
therein, or any payments due thereunder, and save each
Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to
pay such Taxes;
(iii) indemnify each Agent and Lender, and their
respective officers, directors, employees, representatives
and agents from, and hold each of them harmless against,
any and all costs, losses, liabilities, claims, damages or
expenses incurred by any of them (whether or not any of
- 69 -<PAGE>
them is designated a party thereto) (an "Indemnitee")
arising out of or by reason of any investigation,
litigation or other proceeding related to any actual or
proposed use of the proceeds of any of the Term Loans, or
any Credit Party's entering into and performing of the
Agreement, the Term Notes, or the other Credit Documents,
including, without limitation, the reasonable fees and
disbursements of counsel (including foreign counsel)
incurred in connection with any such investigation,
litigation or other proceeding; provided, however,
Interface shall not be obligated to indemnify any
Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct, or
the violation by such Indemnitee of any law, rule or
regulation, unless such violation occurs directly or
indirectly as a result of an action, inaction,
representation or misrepresentation by or on behalf of any
Credit Party or other Consolidated Company; and
(iv) without limiting the indemnities set forth in
subsection (iii) above, indemnify each Indemnitee for any
and all expenses and costs (including without limitation,
remedial, removal, response, abatement, cleanup,
investigative, closure and monitoring costs), losses,
claims (including claims for contribution or indemnity and
including the cost of investigating or defending any claim
and whether or not such claim is ultimately defeated, and
whether such claim arose before, during or after any
Credit Party's ownership, operation, possession or control
of its business, property or facilities or before, on or
after the date hereof, and including also any amounts paid
incidental to any compromise or settlement by the
Indemnitee or Indemnitees to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judg-
ments, suits, disbursements, encumbrances, liens, damages
(including without limitation damages for contamination or
destruction of natural resources), penalties and fines of
any kind or nature whatsoever (including without
limitation in all cases the reasonable fees, other charges
and disbursements of counsel in connection therewith)
incurred, suffered or sustained by that Indemnitee based
upon, arising under or relating to Environmental Laws
based on, arising out of or relating to in whole or in
part, the existence or exercise of any rights or remedies
by any Indemnitee under this Agreement, any other Credit
Document or any related documents (but excluding those
incurred, suffered or sustained by any Indemnitee as a
result of any action taken by or on behalf of the Lenders
with respect to any Subsidiary of Interface owned or
controlled by the Lenders, the Collateral Agent, or their
nominees or designees, as a result of their acquisition of
Pledged Stock pursuant to exercise of remedies under the
Pledge Agreements).
If and to the extent that the obligations of Interface under this
Section 10.04 are unenforceable for any reason, Interface hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
Section 10.05. Right of Setoff. In addition to and not
in limitation of all rights of offset that any Lender or other holder of
a Term Note may have under applicable law, each Lender or other holder of
a Term Note shall, upon the occurrence of any Event of Default and
- 70 -<PAGE>
whether or not such Lender or such holder has made any demand or any
Credit Party's obligations are matured, have the right to appropriate and
apply to the payment of any Credit Party's obligations hereunder and the
other Credit Documents, all deposits of any Credit Party (general or
special, time or demand, provisional or final) then or thereafter held by
and other indebtedness or property then or thereafter owing by such
Lender or other holder to any Credit Party, whether or not related to
this Agreement or any transaction hereunder.
Section 10.06. Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, provided that Interface may not assign or transfer
any of its interest hereunder without the prior written consent of the
Lenders.
(b) Any Lender may make, carry or transfer Term Loans at,
to or for the account of, any of its branch offices or the office of an
Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its
interests, rights and obligations under this Agreement (including all or
a portion of its Term Loans at the time owing to it and the Term Notes
held by it) 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), (ii) the
aggregate amount of the 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 Term Loans of $5,000,000, (iv) the parties to each
such assignment shall execute and deliver to the Co-Agents an Assignment
and Acceptance, together with a Term Note or Notes subject to such
assignment and a processing and recordation fee of $2500, and (v) the
assigning Lender shall also assign to such Eligible Assignee a
corresponding portion of its interest, rights and obligations under the
Credit Agreement in respect of such assigning Lender's Credit Agreement
Term Loans; 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 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. From and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least
five (5) Business Days after the execution thereof, the assignee
thereunder shall be a party hereto and to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement. Within five (5) Business
Days after receipt of the notice and the Assignment and Acceptance,
Interface, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Term Note or Notes,
a new Term Note or Notes to the order of such assignee in a principal
amount equal to the applicable Term Loans assumed by it pursuant to such
Assignment and Acceptance and new Term Note or Notes to the assigning
Lender in the amount of its retained Term Loans. Such new Term Note or
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Term Note or Notes, shall be dated
- 71 -<PAGE>
the date of the surrendered Term Note or Notes which they replace, and
shall otherwise be in substantially the form attached hereto.
(d) Each Lender may, without the consent of Interface or
the Agents, sell participations to one or more banks or other entities in
all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Term Loans and the Term Notes held by
it); provided, however, that (i) no Lender may sell a participation in
its aggregate Term Loans (after giving effect to any permitted assignment
hereof) in an amount in excess of fifty percent (50%) of such aggregate
Term Loans, except that no such maximum amount shall be applicable to any
such participation sold at any time there exists an Event of Default
hereunder, (ii) such Lender's obligations under this Agreement shall
remain unchanged, (iii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, and
(iv) the participating bank or other entity shall not be entitled to the
benefit (except through its selling Lender) of the cost protection
provisions contained in Article III of this Agreement, and (v) Interface
and the Agents and other Lenders shall continue to deal solely and
directly with each Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents, and
such Lender shall retain the sole right to enforce the obligations of
Interface relating to the Term Loan and to approve any amendment,
modification or waiver of any provisions of this Agreement and the other
Credit Documents.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Interface or
the other Consolidated Companies furnished to such Lender by or on behalf
of Interface or any other Consolidated Company; provided that, prior to
any such disclosure of information designated by Interface as
confidential, the Lender proposing to make such assignment or sell such
participation shall obtain from such prospective assignee or participant
an agreement whereby such prospective assignee or participant shall agree
to preserve the confidentiality of such confidential information con-
sistent with the provisions of Section 6.05.
(f) Any Lender may at any time assign all or any portion
of its rights in this Agreement and the Term Notes issued to it to a
Federal Reserve Bank; provided that no such assignment shall release the
Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b) have
been levied or imposed so as to require withholdings or deductions by
Interface and payment by Interface of additional amounts to any Lender as
a result thereof, (ii) any Lender shall make demand for payment of any
material additional amounts as compensation for increased costs or for
its reduced rate of return pursuant to Section 3.10 or 3.17 hereof, or
(iii) any Lender shall decline to consent to a modification or waiver of
the terms of this Agreement or the other Credit Documents requested by
Interface, then and in such event, upon request from Interface delivered
to such Lender and the Co-Agents, such Lender shall assign, in accordance
with the provisions of Section 10.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to
another Lender or an Eligible Assignee selected by Interface, in
consideration for the payment by such assignee to the Lender of the
principal of, and interest on, the outstanding Term Loans accrued to the
date of such assignment, and the assumption of such Lender's Term Loan
Commitment hereunder, together with any and all other amounts owing to
such Lender under any provisions of this Agreement or the other Credit
Documents accrued to the date of such assignment.
- 72 -<PAGE>
Section 10.07. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE TERM NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE TERM NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN
THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR THE SUPERIOR COURT OF
COBB COUNTY, GEORGIA, OR IN ANY COURT OF THE UNITED STATES OF AMERICA FOR
THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, INTERFACE HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY
JURY, AND INTERFACE HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) INTERFACE HEREBY IRREVOCABLY DESIGNATES EACH OF G.
KIMBROUGH TAYLOR, JR. AND KILPATRICK STOCKTON LLP, EACH OF ATLANTA,
GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND
ON BEHALF OF INTERFACE, SERVICE OF PROCESS IN SUCH RESPECTIVE
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR THE TERM NOTES OR ANY DOCUMENT RELATED THERETO. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON EITHER SUCH LOCAL AGENT
WILL BE PROMPTLY FORWARDED BY MAIL TO INTERFACE AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF INTERFACE TO RECEIVE
SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. IF
FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY BE MADE ON EITHER SUCH
LOCAL AGENT, INTERFACE FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO INTERFACE AT ITS SAID ADDRESS, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the Agents,
any Lender, any holder of a Term Note or any Credit Party to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Interface in any other
jurisdiction.
Section 10.08. Independent Nature of Lenders' Rights.
The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights pursuant to this Agreement and its Term
Notes, and it shall not be necessary for any other Lender to be joined as
an additional party in any proceeding for such purpose.
Section 10.09. Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 10.10. Survival. (a) The obligations of
Interface under Sections 5.07(b), 3.10, 3.12, 3.13, 3.17, and 10.04
hereof shall survive the payment in full of the Term Notes after the
Final Maturity Date. All representations and warranties made herein, in
the certificates, reports, notices, and other documents delivered pursu-
- 73 -<PAGE>
ant to this Agreement shall survive the execution and delivery of this
Agreement, the other Credit Documents, and such other agreements and
documents, the making of the Term Loans hereunder, the execution and
delivery of the Term Notes.
(b) The obligations of the Co-Agents, the Lenders, their
assignees and participants under Sections 3.07(b), 6.05 and 10.06(e)
hereof shall survive the payment in full of the Term Notes after the
Final Maturity Date.
Section 10.11. Severability. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be
invalid, illegal or unenforceable, in whole or in part, in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.12. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition
exists.
Section 10.13. Change in Accounting Principles, Fiscal
Year or Tax Laws. If (i) any preparation of the financial statements
referred to in Section 6.07 hereafter occasioned by the promulgation of
rules, regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with
similar functions) result in a material change in the method of
calculation of financial covenants, standards or terms found in this
Agreement, (ii) there is any change in Interface's fiscal quarter or
fiscal year, or (iii) there is a material change in federal tax laws
which materially affects any of the Consolidated Companies' ability to
comply with the financial covenants, standards or terms found in this
Agreement, the parties agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired
result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if
such changes had not been made. Unless and until such provisions have
been so amended, the provisions of this Agreement shall govern.
Section 10.14. Headings Descriptive; Entire Agreement.
The headings of the several sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement. This
Agreement, the other Credit Documents, and the agreements and documents
required to be delivered pursuant to the terms of this Agreement
constitute the entire agreement among the parties hereto and thereto
regarding the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such subject
matters.
- 74 -<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Atlanta, Georgia, by their
duly authorized officers as of the day and year first above written.
Address for Notices: INTERFACE, INC.
2859 Paces Ferry Road
Suite 2000
Atlanta, GA 30339 By: /s/ Daniel T. Hendrix
Attention: Daniel T. Hendrix Daniel T. Hendrix
Senior Vice President
Telex No.:
Answerback:
Telecopy No.: 404/319-0070
- 75 -<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA,
as Administrative Agent and Collateral Agent
25 Park Place
23rd Floor
Atlanta, GA 30303
Attention: Thomas R. Banks By: /s/ Thomas R. Banks
Name: Thomas R. Banks
Title: Assistant Vice President
Telex No.: 542210
Answerback: TRUSCO INT ATL
By: /s/ David W. Parker
Telecopy No.: 404/588-8833 Name: David W. Parker
Title: Group Vice President
Payment Office:
25 Park Place, N.E.
Atlanta, GA 30303<PAGE>
Address for Notices: THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
By: /s/ Judy Cornwell
Name: Judy Cornwell
Title: Authorized Agent
Telex No.:
Answerback:
By: /s/ Noel St. Laurence
Telecopy No.: 312/732-5296 Name: Noel St. Laurence
Title: Authorized Agent
Administrative Office:
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
Payment Offices:
(See Schedule 4.01)
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA
25 Park Place
23rd Floor
Atlanta, GA 30303
Attention: Thomas R. Banks By: /s/ Thomas R. Banks
Name: Thomas R. Banks
Title: Assistant Vice President
Telex No.: 542210
Answerback: TRUSCO INT ATL
By: /s/ David W. Parker
Telecopy No.: 404/588-8833 Name: David W. Parker
Title: Group Vice President
Domestic Lending Office:
One Park Place, N.E.
Atlanta, GA 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
Eurocurrency Lending Office:
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No. 542210
Answerback: TRUSCO INT ATL
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $8,250,000 11.00000%
/TABLE
<PAGE>
Address for Notices: THE FIRST NATIONAL BANK OF CHICAGO
Mail Suite 0324
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
By: /s/ Judy Cornwell
Name: Judy Cornwell
Title: Authorized Agent
Telex No.: 4330253
Answerback: FNBC UI
Telecopy No.: 312/732-5296
Administrative Office
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Judith L. Cornwell
Payment Offices:
(See Schedule 4.01)
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $8,250,000 11.00000%
</TABLE>
<PAGE>
Address for Notices: THE BANK OF TOKYO-MITSUBISHI,
LTD., ATLANTA AGENCY
133 Peachtree Street, N.E.
4970 Georgia-Pacific Center
Atlanta, GA 30303
Attention: Brandon Meyerson By: /s/ Brandon A. Meyerson
Name: Brandon A. Meyerson
Telephone: 404/577-2960 Title: Assistant Vice President
Telecopy No.: 404/577-1155
Telex No.: 6827300
Answerback: 6827300BOT ATL
Domestic Lending Office:
4970 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Eurocurrency Lending Office:
4970 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $5,100,000 6.80000%
/TABLE
<PAGE>
Address for Notices: CIBC INC.
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road,
Suite 1200 By: /s/ William Humphries
Atlanta, Georgia 30339 Name: William Humphries
Attention: William Humphries Title: Director, CIBC Wood Gundy
Securities Corp. AS AGENT
Telephone: 770/319-4906
Telecopy No.: 770/319-4954
Domestic Lending Office:
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Eurocurrency Lending Office:
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $5,600,000 7.46667%
</TABLE>
<PAGE>
Address for Notices: CREDITANSTALT-BANKVEREIN
Two Ravinia Drive
Suite 1680 By: /s/ Carl G. Drake
Atlanta, Georgia 30346 Name: Carl G. Drake
Attention: Carl Drake Title: Senior Associate
Telephone: 770/390-1848 By: /s/ Robert M. Biringer
Telecopy No.: 770/390-1851 Name: Robert M. Biringer
Title: Executive Vice President
Domestic Lending Office:
Two Greenwich Plaza
Greenwich, CT 06830-6353
Attn: Lisa Bruno
Eurocurrency Lending Office:
Two Greenwich Plaza
Greenwich, CT 06830-6353
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $6,250,000 8.33333%
/TABLE
<PAGE>
Address for Notices: CREDIT LYONNAIS ATLANTA AGENCY
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E. By: /s/ David M. Cawrse
Suite 4400 Name: David M. Cawrse
Atlanta, GA 30303 Title: First Vice President & Manager
Attention: David Cawrse
Telephone: 404/524-3700
Telecopy No.: 404/584-5249
Domestic Lending Office:
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30303
Eurocurrency Lending Office:
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30303
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $5,100,000 6.80000%
</TABLE>
<PAGE>
Address for Notices: THE SUMITOMO BANK LIMITED
303 Peachtree Street, N.E. By: /s/ Sybil H. Weldon
Suite 4420 Name: Sybil H. Weldon
Atlanta, GA 30308 Title: Vice President & Mgr.
Attention: Roger Arsham
Telephone: 404/524-6544
Telecopy No.: 404/523-7983 By: /s/ Robert N. Arsham
Name: Robert N. Arsham
Domestic Lending Office: Title: Vice President
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
Eurocurrency Lending Office:
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $5,100,000 6.80000%
/TABLE
<PAGE>
Address for Notices: FIRST UNION NATIONAL BANK OF
GEORGIA
999 Peachtree Street, N.E. By: /s/ Michalene Donegan
9th Floor Name: Michalene Donegan
Atlanta, GA 30309 Title: VP
Attention:Michalene Donegan
Telephone: 404/827-7154
Telecopy No.: 404/827-7199
Domestic Lending Office:
999 Peachtree Street, N.E.
9th Floor
Atlanta, GA 30309
Eurocurrency Lending Office:
999 Peachtree Street, N.E.
9th Floor
Atlanta, GA 30309
PRO RATA
AMOUNT SHARE
TERM LOAN COMMITMENT: $6,350,000 8.46667%
<PAGE>
Address for Notices: FLEET BANK OF MAINE
80 Exchange Street By: /s/ Neil C. Buitenhuys
Bangor, Maine 04401 Name: Neil C. Buitenhuys
Attention: Neil C. Buitenhuys Title: Vice President
Telephone: 207/941-6140
Telecopy No.: 207/941-6023
Domestic Lending Office:
511 Congress Street, P. O. Box 1280
Portland, Maine 04104-5006
Eurocurrency Lending Office:
511 Congress Street, P. O. Box 1280
Portland, Maine 04104-5006
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $8,800,000 11.73333%
/TABLE
<PAGE>
Address for Notices: NATIONSBANK, N.A.
100 North Tryon Street
Mail Code NC1-007-08-11 By: /s/ David H. Dinkins
Charlotte, NC 28255 Name: David H. Dinkins
Attention: Title: Vice President
Telephone: 704/386-2951
Telecopy No.: 704/386-1270
Domestic Lending Office:
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, NC 28255
Eurocurrency Lending Office:
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, NC 28255
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $6,350,000 8.46667%
</TABLE>
<PAGE>
Address for Notices: PNC BANK, NATIONAL ASSOCIATION
One PNC Plaza
Fifth Avenue and Wood Street By: /s/ Robert J. Mitchell, Jr.
Pittsburgh, PA 15265 Name: Robert J. Mitchell, Jr.
Attention: Robert J. Mitchell, Jr. Title: Vice President
Telephone: 412/762-6547
Telecopy No.: 412/762-6484
Domestic Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Eurocurrency Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $3,500,000 4.66667%
/TABLE
<PAGE>
Address for Notices: WACHOVIA BANK, N.A.
(Formerly Wachovia Bank of Georgia, N.A.)
191 Peachtree Street, N.E.
30th Floor
Atlanta, GA 30383
Attention: Doug Strickland By: /s/ Douglas W. Strickland
Name: Douglas W. Strickland
Telephone: 404/332-1382 Title: Vice President
Telecopy No.: 404/332-6920
Domestic Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
Eurocurrency Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
<S> <C> <C>
TERM LOAN COMMITMENT: $6,350,000 8.46667%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS INCLUDED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 29, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TYO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000715787
<NAME> INTERFACE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> JUN-29-1997
<CASH> $9,816
<SECURITIES> 0
<RECEIVABLES> 170,469
<ALLOWANCES> 6,532
<INVENTORY> 153,383
<CURRENT-ASSETS> 359,906
<PP&E> 429,831
<DEPRECIATION> 213,766
<TOTAL-ASSETS> 880,724
<CURRENT-LIABILITIES> 154,088
<BONDS> 401,037
0
0
<COMMON> 2,715
<OTHER-SE> 298,529
<TOTAL-LIABILITY-AND-EQUITY> 880,724
<SALES> 529,091
<TOTAL-REVENUES> 529,091
<CGS> 356,774
<TOTAL-COSTS> 486,585
<OTHER-EXPENSES> 19,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,476
<INCOME-PRETAX> 23,357
<INCOME-TAX> 9,044
<INCOME-CONTINUING> 14,313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,313
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
