SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended April 5, 1998
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 May 11, 1998:
Class Number of Shares
----- ----------------
Class A Common Stock, $.10 par value per share 23,262,196
Class B Common Stock, $.10 par value per share 2,840,440
1
<PAGE>
INTERFACE, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets - April 5, 1998 and December 28, 1997 3
Statements of Income - Three Months Ended 4
April 5, 1998 and March 30, 1997
Statements of Comprehensive Income - Three Months Ended 4
April 5, 1998 and March 30, 1997
Statements of Cash Flows - Three Months 5
Ended April 5, 1998 and March 30, 1997
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
____________________________________
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
SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED
AS EXHIBIT 99.1 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 28, 1997, WHICH DISCUSSION IS INCORPORATED
HEREIN BY THIS REFERENCE.<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
ASSETS APRIL 5, DECEMBER 28,
- ------ 1998 1997
--------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 9,352 $ 10,212
Accounts Receivable 184,719 177,977
Inventories 191,646 157,630
Deferred Tax Asset 5,176 5,156
Prepaid Expenses 29,885 24,265
--------- ---------
TOTAL CURRENT ASSETS 420,778 375,240
PROPERTY AND EQUIPMENT, less
accumulated depreciation 239,912 228,781
EXCESS OF COST OVER NET ASSETS ACQUIRED 288,425 278,597
OTHER ASSETS 53,114 46,945
---------- --------
$1,002,229 $929,563
========== ========
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
- -------------------------------------------
CURRENT LIABILITIES:
Notes Payable $ 19,922 $ 22,264
Accounts Payable 84,553 79,279
Accrued Expenses 82,877 87,543
Current Maturities of Long-Term Debt 2,950 2,751
--------- ---------
TOTAL CURRENT LIABILITIES 190,302 191,837
LONG-TERM DEBT, less current maturities 261,261 264,499
SENIOR SUBORDINATED NOTES 125,000 125,000
DEFERRED INCOME TAXES 31,391 28,873
--------- ---------
TOTAL LIABILITIES 607,954 610,209
--------- ---------
Minority Interest 2,989 2,989
Common Stock 2,961 2,776
Additional Paid-In Capital 233,395 161,584
Retained Earnings 206,369 197,906
Accumulated Other Comprehensive Income - Foreign Currency
Translation (33,693) (28,155)
Treasury Stock, 3,600
Class A Shares, at Cost (17,746) (17,746)
--------- ---------
$1,002,229 $ 929,563
========== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3<PAGE>
<TABLE>
<CAPTION>
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
--------------------------
APRIL 5, MARCH 30,
1998 1997
-------- ---------
<S> <C> <C>
Net Sales $318,952 $257,345
Cost of Sales 211,191 174,432
-------- --------
Gross Profit on Sales 107,761 82,913
Selling, General and Administrative Expenses 80,623 62,956
-------- --------
Operating Income 27,138 19,957
Other (Expense) Income - Net (10,418) (9,543)
-------- --------
Income before Taxes on Income 16,720 10,414
Taxes on Income 6,437 4,061
-------- --------
Net Income $ 10,283 $ 6,353
======== ========
Basic Earnings Per Share $0.42 $0.28
======== ========
Diluted Earnings Per Share $0.41 $0.27
======== ========
Average Shares Outstanding -- Basic 24,279 22,584
======== ========
Average Shares Outstanding -- Diluted 25,389 23,494
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
APRIL 5, MARCH 30,
1998 1997
<S> <C> <C>
Net Income $10,283 $6,353
Other Comprehensive Income, Net of Tax
Foreign Currency Translation Adjustment (5,538) (10,760)
------- ---------
Comprehensive Income $ 4,745 $ (4,407)
======= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
APRIL 5, MARCH 30,
1998 1997
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $ (8,415) $ (1,883)
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (11,307) (11,878)
Acquisitions of businesses (40,853) -
Other (4,565) (3,257)
-------- --------
(56,725) (15,135)
-------- --------
FINANCING ACTIVITIES:
Net borrowing (reduction) of long-term debt (2,312) 4,455
Issuance of common stock 68,464 3,869
Dividends paid (1,820) -
-------- --------
64,332 8,324
-------- --------
Net cash provided by (used for) operating,
investing and financing activities (808) (8,694)
Effect of exchange rate changes on cash (52) (68)
-------- --------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period (860) (8,762)
Balance at beginning of period 10,212 8,762
-------- --------
Balance at end of period $ 9,352 $ -
======== ========
</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 28,
1997, 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:
APRIL 5, DECEMBER 28,
1998 1997
---- ----
Finished Goods $115,266 $91,016
Work in Process 34,022 29,094
Raw Materials 42,358 37,520
-------- --------
$191,646 $157,630
======== ========
NOTE 3 - BUSINESS ACQUISITIONS AND DIVESTITURES
On December 30, 1997, the Company completed the acquisition of
the European carpet businesses of Readicut International plc
("Readicut"), for an estimated $50 million, subject to final
adjustments. After the planned divestiture of certain assets of
Readicut, including its Network Flooring dealer division and
Joseph, Hamilton & Seaton Ltd., the Company's final investment
for the retained Readicut businesses are expected to be less than
$15 million. The retained businesses will include Firth Carpets
Ltd., based in Brighouse, West Yorkshire, a leading manufacturer
of high quality woven and tufted carpet primarily for the
contract markets; and a 40% interest in Vebe Floorcoverings BV,
located in the Netherlands, a leading manufacturer of needle
punch carpet.
In December 1997, the Company sold certain assets related to
the commercial manufacture of zinc diacrylate, a chemical
compound used in the production of golf balls, for $14.1 million
in cash. An immaterial gain was realized on the sale. The
Company generated 1997 sales of $7.9 million and operating income
of $1.1 million related to the manufacture of this chemical
compound.
During 1997, the Company acquired 100% of the outstanding
capital stock of five floorcovering contractors: Canaan
Corporation, based in Connecticut; Carpet Services of Tampa,
Inc., based in Florida; Facilities Resource Group, Inc., based in
Illinois; Floormart, Inc., based in California; and Carpet
Solutions Holdings Pty Ltd., based in Queensland, Australia.
These contractors are engaged primarily in the installation of
commercial floorcoverings. As consideration, the Company issued
257,584 shares of Class A Common Stock valued at approximately
$3.5 million and paid $11.1 million in cash. All transactions
have been accounted for as purchases, and accordingly, the
results of operations of the acquired companies since their
acquisition dates have been included within the consolidated
financial statements. The excess of the purchase price over the
fair value of the net assets acquired was approximately $17.5
million and is being amortized over 25 years.
In June 1997, the Company acquired 100% of the outstanding
common stock of Camborne Holdings, Ltd., a manufacturer of
interior fabrics based in West Yorkshire, U.K. for approximately
$19.9 million, which was comprised of $17.1 million in cash and
127,806 shares of Class B Common Stock valued at approximately
$2.8 million. The transaction was accounted for as a purchase.
The results of operations of Camborne have been included within
the consolidated financial statements since the acquisition date.
The excess of the purchase price over the fair value of the
assets was approximately $16.8 million and is being amortized
over 40 years.
6
<PAGE>
NOTE 4 - CONCURRENT PUBLIC OFFERINGS
On April 2, 1998, the Company completed concurrent public
offerings of $150 million aggregate principal amount of 7.30%
Senior Notes due 2008 and 1.725 million shares of Class A Common
Stock. The Company intends to use the net proceeds of both
offerings of $212.7 million to reduce amounts outstanding under
its senior credit facility, and for general corporate purposes,
including working capital and future acquisitions.
NOTE 5 - EARNINGS PER SHARE AND DIVIDENDS
In March 1997, the FASB issued SFAS 128, "Earnings per Share."
The new Standard simplifies the computation of earnings per share
and requires presentation of two amounts, basic and diluted
earnings per share. As required by the Standard, the Company has
retroactively restated earnings per share data for all periods
presented.
Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number
of shares of Class A and Class B Common Stock outstanding during
the period. Shares issued or reacquired during the period have
been weighted for the portion of the period that they were
outstanding. Basic earnings per share has been computed based
upon 24,279,000 shares and 22,584,000 shares outstanding for the
periods ended April 5, 1998 and March 30, 1997, respectively.
Diluted earnings per share is calculated in a manner consistent
with that of basic earnings per share while giving effect to all
dilutive potential common shares that were outstanding during the
period. Diluted earnings per share has been computed based upon
25,389,000 shares and 23,494,000 shares outstanding for the
periods ended April 5, 1998 and March 30, 1997, respectively.
For the purposes of computing earnings per common share and
dividends per common share, the Company is treating as treasury
stock (and therefore not outstanding) the shares that are owned
by a wholly-owned subsidiary (3,600,000 Class A shares recorded
at cost).
The following is a reconciliation from basic earnings per
share to diluted earnings per share for each of the periods
presented:
<TABLE>
<CAPTION>
(In Thousands Except Per Share)
Average
Shares Earnings
Period Ended Net Income Outstanding Per Share
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
April 5, 1998 $ 10,283 24,279 $ .42
Effect of Dilution:
Options 1,110
- --------------------------------------------------------------------------------------------------------------------
Diluted $ 10,283 25,389 $ .41
=====================================================
- --------------------------------------------------------------------------------------------------------------------
March 30, 1997 $6,353 22,584 $ .28
Effect of Dilution:
Options 740
Convertible Debt 40 170
- --------------------------------------------------------------------------------------------------------------------
Diluted $6,393 23,494 $ .27
====================================================
</TABLE>
NOTE 6 - COMPREHENSIVE INCOME
Effective the first quarter of 1998, the Company has adopted FAS
130, "Comprehensive Income". This statement has established the
standards for reporting and displaying comprehensive income and its
components (revenues, expenses, gains and losses) as part of a full set of
financial statements. This statement requires that all elements of
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. Since
this statement applies only to the presentation of comprehensive income,
it does not have any impact upon results of operations, financial
position, or cashflows.
7
<PAGE>
NOTE 7 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS The Guarantor
Subsidiaries, which consist of the Company's principal domestic
subsidiaries, are guarantors of the Company's 7.3% senior notes due 2008
and its 9.5% senior subordinated notes due 2005. The Supplemental
Guarantor Financial Statements are presented herein pursuant to
requirements of the Commission.
<TABLE>
<CAPTION>
INTERFACE, INC. AND SUBSIDIARIES
NOTE 7 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED APRIL 5, 1998
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 $241,245 $117,692 $ - $(39,985) $318,952
Cost of sales 174,647 76,529 - (39,985) 211,191
------- ------- --------- -------- --------
Gross profit on sales 66,598 41,163 - - 107,761
Selling, general and 50,050 24,907 5,666 - 80,623
administrative expenses ------- ------- --------- -------- --------
Operating income 16,548 16,256 (5,666) - 27,138
Other expense (income) 3,989 2,477 3,952 - 10,418
------- ------- --------- -------- --------
Income before taxes on income
and Equity in income of 12,559 13,779 (9,618) - 16,720
subsidiaries
Taxes on income 4,874 5,295 (3,732) - 6,437
Equity in income of - - 16,169 (16,169) -
subsidiaries ------- ------- --------- -------- --------
Net income applicable to $ 7,685 $ 8,484 $10,283 ($16,169) $ 10,283
common shareholders ======= ======= ========= ======== ========
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEET
APRIL 5, 1998
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 $ 4,252 $ 6,748 $ (1,648) $ - $ 9,352
Accounts receivable 117,263 95,720 (28,264) - 184,719
Inventories 120,901 70,745 - - 191,646
Miscellaneous 9,190 19,820 6,051 - 35,061
---------- -------- ----------- ------------ ----------
Total current assets 251,606 193,033 (23,861) - 420,778
Property and equipment,
less accumulated depreciation 150,111 83,075 6,726 - 239,912
Investment in subsidiaries 138,088 15,799 373,895 (527,782) -
Other Assets 134,497 18,725 560,543 (660,651) 53,114
Excess of cost over net assets 181,397 103,192 3,836 - 288,425
acquired ---------- -------- ----------- ------------ ----------
$ 855,699 $413,824 $ 921,139 $ (1,188,433) $1,002,229
========== ======== =========== ============ ==========
LIABILITIES AND COMMON
SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 13,886 $ 6,036 $ - $ - $ 19,922
Accounts payable 35,671 48,361 521 - 84,553
Accrued expenses 43,805 52,499 (13,427) - 82,877
Current maturities of long- 1,799 1,151 - - 2,950
term debt
Total current liabilities 95,161 108,047 (12,906) - 190,302
Long-term debt, less
current maturities 240,932 78,972 344,769 (403,412) 261,261
Senior subordinated notes - - 125,000 - 125,000
Deferred income taxes 15,010 7,780 8,601 - 31,391
---------- -------- ----------- ------------ ----------
Total liabilities 351,103 194,799 465,464 (403,412) 607,954
Minority interests - 2,989 - - 2,989
Redeemable preferred stock 57,891 - - (57,891) -
Common stock 93,889 102,199 2,961 (196,088) 2,961
Additional paid-in capital 189,740 11,030 233,395 (200,770) 233,395
Retained earnings 165,712 130,603 222,580 (312,526) 206,369
Accumulated Other Comprehensive (2,636) (27,796) (3,261) - (33,693)
Income
Treasury stock - - - (17,746) (17,746)
---------- -------- ----------- ------------ ----------
$ 855,699 $413,824 $ 921,139 $ (1,188,433) $1,002,229
========== ======== =========== ============ ==========
</TABLE>
9
<PAGE>
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS
ENDED APRIL 5, 1998
<TABLE>
<CAPTION>
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: $ 6,422 $( 29,163) $ 14,326 $ - $(8,415)
------- --------- --------- -------- -------
Cash flows from investing activities:
Purchase of plant and equipment (6,074) (5,088) (145) - (11,307)
Acquisitions, net of cash acquired - - (40,853) - (40,853)
Other - - (4,565) - (4,565)
------- --------- --------- -------- -------
Net cash provided by (used in) investing (6,074) (5,088) (45,563) - (56,725)
activities ------- --------- --------- -------- -------
Cash flows from financing activities:
Net borrowings (repayments) (457) 34,549 (36,404) - (2,312)
Proceeds from issuance of common - - 68,464 - 68,464
stock
Cash dividends paid - - (1,820) - (1,820)
Other - - - - -
------- --------- --------- -------- -------
Net cash provided by (used in) (457) 34,549 30,240 - 64,332
financing activities ------- --------- --------- -------- -------
Effect of exchange rate change on - (52) - - (52)
cash ------- --------- --------- -------- -------
Net increase (decrease) in cash (109) 246 (997) - (860)
Cash at beginning of year 4,361 6,502 (651) - 10,212
------- --------- --------- -------- -------
Cash at end of year $ 4,252 $ 6,748 $ (1,648) $ - $ 9,352
======= ========== ========= ======== =======
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS General
The Company's revenues are derived from sales of commercial
floorcovering products (primarily modular and broadloom carpet)
and related services, interior fabrics and specialty products.
During the quarter ended April 5, 1998 (which was a 14-week period),
the Company had revenues and net income of $319.0 million and $10.3
million, respectively, the highest in the Company's history.
The Company's business, as well as the commercial interiors
market in general, is somewhat cyclical in nature. The Company's
strong financial performance in recent years is attributable inpart
to increased U.S. demand for its products, resulting from a recovery
in the U.S. commercial office market which began in the mid-1990's.
The Company believes that this recovery will continue for a number of
years, and that all of its domestic operations will continue to benefit
from these industry developments. However, a downturn in the market
could lessen the overall demand for commercial interiors products and
could impair the Company's growth. Management believes that the impact upon
the Company of such a downturn would be less pronounced given that the
predominant portion of its sales are generated from the renovations sector
of the market as opposed to the new construction sector.
The Company's growth could also be impacted by international
developments. Specifically, countries in the Asia-Pacific region have
recently experienced weaknesses in their currency, banking and equity
markets. These weaknesses could adversely affect demand for the
Company's products. However, excluding Japan and Australia, sales in the
Asia-Pacific region represented only 1%of the Company's sales during the
quarter ended April 5, 1998. The Company engages in hedging transactions
to reduce its exposure to adverse fluctuations in foreign currency
exchange rates.
RESULTS OF OPERATIONS
For the quarter ended April 5, 1998, the Company's net sales increased
$61.6 million, or 24%, compared with the first quarter of 1997, which was
a 13-week period. The increase was attributable to increased sales
volume (i) of products and related services in the Company's U.S.
floorcovering operations, due to increased demand for and increased
market share of its modular carpet products, as well as additional sales
generated by the Re:Source Americas network, (ii) of floorcovering
products in Europe due in part to the acquisition of Firth Carpets early
in the quarter, and (iii) in the Company's interior fabrics operations
due to increased U.S. and foreign demand for and increased market share
of its fabric products, as well as the acquisition of Camborne Holdings,
Ltd. during 1997. These increases were offset somewhat by (i) decreased
sales volume in the Company's Asia-Pacific division due to the economic
turmoil in Asia, and (ii) a weakening of certain key currencies
(particularly the Dutch guilder) against the U.S. dollar, the Company's
reporting currency.
Cost of sales as a percentage of sales decreased to 66.2% in the
quarter ended April 5, 1998 compared to 67.8% in the same period in 1997.
The decrease was attributable to (i) economies of scale associated with
increased sales volume in the Company's floorcovering and interior
fabrics operations, and (ii) decreased manufacturing costs in the
Company's floorcovering and interior fabrics operations through the
Company's mass customization production strategy and its "war-on-waste"
initiative. The Company's interior fabrics business also experienced
decreased manufacturing costs as a result of continued efficiencies
generated from the new, state-of-the-art yarn manufacturing facility in
Guilford, Maine. These benefits were somewhat offset by the higher cost
of sales of the dealers comprising the Re:Source Americas network.
Selling, general and administrative expenses, as a percentage of net
sales, increased to 25.3% in the quarter ended April 5, 1998 compared to
24.5% in the same period in 1997. The increase was attributable
primarily to (i) the continued development of the Re:Source Americas
network infrastructure and (ii) consulting and development expenses
associated with the Year 2000 initiative. The increase was somewhat
offset by the lower SG&A ratios of the dealers comprising the Re:Source
Americas network.
Other expense increased $0.9 million in the first quarter of 1998
compared to the first quarter of 1997, due primarily to an increase in
bank debt incurred as a result of the Company's acquisitions.
11<PAGE>
As a result of the aforementioned factors, the Company's net income
increased 62% to $10.3 million for the quarter ended April 5, 1998,
compared to $6.4 for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash during the quarter ended
April 5, 1998 were proceeds from issuance of securities and funds
provided by operating activities. During the quarter, the Company
completed concurrent public offerings of $150 million aggregate principal
amount of 7.30% Senior Notes due 2008 and 1.725 million shares of Class A
Common Stock. The Company intends to use the net proceeds of both
offerings of $212.7 million to reduce amounts outstanding under its
senior credit facility, and for general corporate purposes, including
working capital and future acquisitions. Amounts applied to the
revolving credit portion of the facility will be available for
reborrowing.
The primary uses of cash during the quarter ended April 5,1998 were
(i) $40 million associated with acquisitions and (ii) $11 million for
additions to property and equipment in the Company's manufacturing
facilities.
Management believes that cash provided by operations and long-term
loan commitments will provide adequate funds for current commitments and
other requirements in the foreseeable future.
YEAR 2000
As is the case with other companies using computers in their
operations, the Company is faced with the task of addressing the Year
2000 issue during the next seven quarters. The Year 2000 issue arises
from the widespread use of computer programs that rely on two-digit codes
to perform computations or decision-making functions. The Company has
done a comprehensive review of its computer programs to identify the
systems that would be affected by the Year 2000 issue, and is in the
process of reviewing, on a global basis, the Company's Year 2000 position
and exposure to third party customers, distributors, suppliers, and
banking institutions. The Company has also hired an outside consulting
firm to assist in this conversion process and is beginning the process of
modifying its computer program code to the four digit fields necessary to
be Year 2000 ready.
The Company currently estimates the total cost of such modifications,
excluding the cost of modifications to program logic control systems
relative to manufacturing equipment, to be at least $19 million, although
it could be significantly more. The Company and its outside consultants
are currently evaluating the costs of modifications to these program
logic control systems. Of the total project cost, approximately $10
million is attributable to the cost of new hardware and software which
will be required in connection with the global consolidation of the
Company's management and financial accounting systems. This new
equipment and upgraded technology will have a definable value lasting
beyond the Year 2000. In these instances, where Year 2000 compliance is
ancillary, the Company intends to capitalize and depreciate such costs.
The remaining $9 million (based on current estimates) will be expensed as
incurred. During the quarter ended April 5, 1998, the Company expensed
approximately $1.0 million in regards to such modifications. There can
be no guarantee that these estimates will be achieved and actual results
could differ from those anticipated. Specific factors that might cause
differences include, but are not limited to, the ability of suppliers,
customers and other companies on which the Company's systems rely to
modify or convert their systems to be Year 2000 ready, the ability to
locate and correct all relevant computer codes and similar uncertainties.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company employs the use of derivative financial instruments for
the purpose of reducing its exposure to adverse fluctuations in interest
and foreign currency exchange rates. While these hedging instruments are
subject to fluctuations in value, such fluctuations are generally offset
by the fluctuations in value of the underlying exposures being hedged.
The Company does not hold or issue derivative financial instruments
for trading purposes. The Company monitors the use of derivative
financial instruments through the use of objective measurable systems,
well-defined market and credit risk limits, and timely reports to senior
management according to prescribed guidelines. The Company has
established strict counterparty credit guidelines and only enters into
transactions with financial institutions of investment grade or better.
As a result, the Company considers the risk of counterparty default to be
minimal.
12<PAGE>
Management of the Company has developed and implemented a policy to
maintain the percentage of fixed and variable rate debt within certain
parameters. The Company enters into interest rate swap agreements, which
maintain the fixed/variable mix within these defined parameters. In
these swaps, the Company agrees to exchange, at specified intervals, the
difference between fixed and variable interest amounts calculated by
reference to an agreed-upon notional principal linked to LIBOR (London
Interbank Offered Rate). At April 5, 1998, the Company had utilized
interest rate swap agreements to effectively convert approximately $64.5
million of variable rate debt to fixed rate debt. The weighted average
rate on these borrowings was 6.6% at April 5, 1998. The interest rate
swap agreements have maturity dates ranging from five to twenty-four
months.
The purpose of the Company's foreign currency hedging activities is
to reduce the risk that the eventual local currency inflows resulting
from sales to foreign customers will be adversely affected by changes in
exchange rates. The Company enters into forward exchange and currency
swap contracts to hedge certain firm sales commitments denominated in
foreign currencies. At April 5, 1998, the Company had approximately $14.5
million (notional amount) of foreign currency hedge contracts
outstanding. The contracts served to hedge firmly committed Dutch
guilder, German mark, Japanese yen, French franc, British pound sterling,
and other foreign currency revenues. The contracts generally have
maturity dates of six to nine months.
The Company, as of April 5, 1998, recognized a $5.5 million increase
in its foreign currency translation adjustment account compared to
December 27, 1998, because of the weakening of the Dutch guilder and
certain other currencies against the U.S. dollar. The increase was
associated primarily with the Company's investments in certain foreign
subsidiaries located in 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
Not applicable.
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 AND USE OF PROCEEDS
On February 24, 1998, the Company's Board of Directors declared a
dividend of one preferred share purchase right (a "Right") for each share
of Common Stock of the Company. Each Right entitles the registered
holder to purchase from the Company one one-hundredth (1/100) of a share
of Series B Participating Cumulative Preferred Stock (the "Preferred
Shares"), of the Company at a price of $180.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment to the
exercise price and the number of Preferred Shares issuable upon exercise
from time to time to prevent dilution. The Rights are not exercisable
until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Stock or (ii) 10 business days following the
commencement of, or announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the
outstanding shares of Common Stock (the earlier of such dates being
called the "Distribution Date").
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated
assets or earning power is sold after a person or group has become an
Acquiring Person, proper provision will be made so that each holder of a
Right will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of
the Right. In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned
by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common
Stock having a market value of two times the exercise price of the Right.
13<PAGE>
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 100 times the dividend declared per
share of Common Stock. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100.00 per share but will be entitled to an aggregate payment
of 100 times the payment made per share of Common Stock. Each Preferred
Share will have 100 votes, voting together with the shares of Common
Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each Preferred
Share will be entitled to receive 100 times the amount received per share
of Common Stock. These rights are protected by customary antidilution
provisions.
Prior to the Distribution Date, the Rights may not be detached or
transferred separately from the Common Stock. The Rights will expire on
March 15, 2008 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged
by the Company. At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial ownership of 15%
or more of the outstanding Common Stock, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (the "Redemption Price"). Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the
Redemption Price. A more detailed description and terms of the Rights
are set forth in a Rights Agreement between the Company and Wachovia
Bank, N.A. as Rights Agent.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
EXHIBIT DESCRIPTION OF EXHIBIT
NUMBER
3.1 Composite Articles of Incorporation (included as Exhibit
4.1 to the Company's current report on Form 8-K dated
March 4, 1998, previously filed with the Commission 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.
14<PAGE>
4.2 Rights Agreement between the Company and Wachovia Bank, N.A.,
dated as of March 4, 1998, with an effective date of March 16,
1998 (included as Exhibit 10.1A to the Company's registration
statement on Form 8-A/A dated March 12, 1998, previously filed
with the Commission and incorporated herein by reference).
4.3 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); and Supplement No. 1 to
Indenture, dated as of December 27, 1996 (included as Exhibit
4.2(b) to the Company's Annual Report on Form 10-K for the year
ended December 29, 1996, previously filed with the Commission
and incorporated herein by reference).
4.4 Form of Indenture governing the Company's 7.3% senior notes due
2008, among the Company, certain U.S. subsidiaries of the
Company, as Guarantors, and First Union National Bank, as
trustee (included as Exhibit 4.1 to the Company's registration
statement on Form S-3/A, File No. 333-46611, previously filed
with the Commission and incorporated herein by reference).
10.1 Amendment to Employment Agreement of Ray C. Anderson dated
January 6, 1998
10.2 Amendment to Change in Control Agreement of Ray C. Anderson
dated January 6, 1998.
10.3 Amendment to Employment Agreement of Charles R. Eitel dated
January 6, 1998.
10.4 Amendment to Change in Control Agreement of Charles R. Eitel
dated January 6, 1998.
10.5 Amendment to Employment Agreement of Brian L. DeMoura dated
January 6, 1998.
10.6 Amendment to Change in Control Agreement of Brian L. DeMoura
dated January 6, 1998.
10.7 Amendment to Employment Agreement of Daniel T. Hendrix dated
January 6, 1998.
10.8 Amendment to Change in Control Agreement of Daniel T. Hendrix
dated January 6, 1998.
10.9 Amendment to Employment Agreement of Gordon D. Whitener dated
January 6, 1998.
10.10 Amendment to Change in Control Agreement of Gordon D. Whitener
dated January 6, 1998.
10.11 Amendment to Employment Agreement of Raymond S. Willoch dated
January 6, 1998.
10.12 Amendment to Change in Control Agreement of Raymond S. Willoch
dated January 6, 1998.
10.13 Amendment to Employment Agreement of Jeffrey A. Goldberg dated
January 6, 1998.
10.14 Amendment to Change in Control Agreement of Jeffrey A. Goldberg
dated January 6, 1998.
10.15 Amendment to Employment Agreement of Alan S. Kabus dated
January 6, 1998.
10.16 Amendment to Change in Control Agreement of Alan S. Kabus dated
January 6, 1998.
10.17 Amendment to Employment Agreement of Joyce D. LaValle dated
January 6, 1998.
15<PAGE>
10.18 Amendment to Change in Control Agreement of Joyce D. LaValle
dated January 6, 1998.
10.19 Amendment to Employment Agreement of John H. Walker dated
January 6, 1998.
10.20 Amendment to Change in Control Agreement of John H. Walker dated
January 6, 1998.
10.21 Amendment to Employment Agreement of John L. Partridge dated
January 6, 1998.
10.22 Amendment to Change in Control Agreement of John L. Partridge
dated January 6, 1998.
10.23 Amendment to Employment Agreement of John R. Wells dated January 6, 1998.
10.24 Amendment to Change in Control Agreement of John R. Wells dated
January 6, 1998.
10.25 Amendment to Employment Agreement of Michael D. Bertolucci dated
January 6, 1998.
10.26 Amendment to Change in Control Agreement of Michael D. Bertolucci
dated January 6, 1998.
10.27 Form of Salary Continuation Agreement.
10.28 Consent and Waiver, dated as of March 20, 1998, related to (i)
Second Amended and Restated Credit Agreement, dated as of June 25,
1997, among the Company, Interface Europe B.V., Interface
Europe, Ltd., the lenders listed therein, SunTrust Bank, Atlanta
and the First National Bank of Chicago; and (ii) Term Loan
Agreement, dated as of June 25, 1997, among the Company, the
lenders listed therein, SunTrust Bank, Atlanta and the First
National Bank of Chicago. 10.29 Agreement for the sale and purchase
of the entire issued share capital of T. F. Firth & Sons Limited, Tayrich
Limited and Vebe Floorcoverings B.V., dated as of December 5, 1997, among
Readicut International PLC, Readicut Netherlands B.V., Interface
Europe Ltd. And Interface Europe B.V.
27.1 Financial Data Schedule (for SEC use only).
(b) The following reports on Form 8-K were filed during the
quarter ended April 5, 1998.
<TABLE>
<CAPTION>
Date Filed Items Reported Financial Statements Filed
---------- --------------- --------------------------
<C> <S> <S>
March 4, 1998 Adoption of Shareholder None
Rights Plan
March 17, 1998 Commencement of Concurrent Consolidated Balance Sheets of
Public Offerings the Company and subsidiaries
as of December 28, 1997 and December 29, 1996; and
related consolidated statements of income and cash
flows for each of the three years in the period ended
December 28, 1997
April 3, 1998 Closing of Concurrent Public None
Offerings
16
<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: May 14, 1998 By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Senior Vice President
(Principal Financial Officer)
17
<PAGE>
EXHIBIT INDEX
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<C> <S>
10.1 Amendment to Employment Agreement of Ray C. Anderson dated January 6, 1998.
10.2 Amendment to Change in Control Agreement of Ray C. Anderson dated January 6, 1998.
10.3 Amendment to Employment Agreement of Charles R. Eitel dated January 6, 1998.
10.4 Amendment to Change in Control Agreement of Charles R. Eitel dated January 6, 1998.
10.5 Amendment to Employment Agreement of Brian L. DeMoura dated January 6, 1998.
10.6 Amendment to Change in Control Agreement of Brian L. DeMoura dated January 6, 1998.
10.7 Amendment to Employment Agreement of Daniel T. Hendrix dated January 6, 1998.
10.8 Amendment to Change in Control Agreement of Daniel T. Hendrix dated January 6, 1998.
10.9 Amendment to Employment Agreement of Gordon D. Whitener dated January 6, 1998.
10.10 Amendment to Change in Control Agreement of Gordon D. Whitener dated January 6, 1998.
10.11 Amendment to Employment Agreement of Raymond S. Willoch dated January 6, 1998.
10.12 Amendment to Change in Control Agreement of Raymond S. Willoch dated January 6, 1998.
10.13 Amendment to Employment Agreement of Jeffrey A. Goldberg dated January 6, 1998.
10.14 Amendment to Change in Control Agreement of Jeffrey A. Goldberg dated January 6, 1998.
10.15 Amendment to Employment Agreement of Alan S. Kabus dated January 6, 1998.
10.16 Amendment to Change in Control Agreement of Alan S. Kabus dated January 6, 1998.
10.17 Amendment to Employment Agreement of Joyce D. LaValle dated January 6, 1998.
10.18 Amendment to Change in Control Agreement of Joyce D. LaValle dated January 6, 1998.
10.19 Amendment to Employment Agreement of John H. Walker dated January 6, 1998.
10.20 Amendment to Change in Control Agreement of John H. Walker dated January 6, 1998.
10.21 Amendment to Employment Agreement of John L. Partridge dated January 6, 1998.
10.22 Amendment to Change in Control Agreement of John L. Partridge dated January 6, 1998.
10.23 Amendment to Employment Agreement of John R. Wells dated January 6, 1998.
10.24 Amendment to Change in Control Agreement of John R. Wells dated January 6, 1998.
10.25 Amendment to Employment Agreement of Michael D. Bertolucci dated January 6, 1998.
10.26 Amendment to Change in Control Agreement of Michael D. Bertolucci dated January 6, 1998.
10.27 Form of Salary Continuation Agreement.
10.28 Consent and Waiver, dated as of March 20, 1998, related to (i) Second Amended and
Restated Credit Agreement, dated as of June 25, 1997, among the Company, Interface
Europe B.V., Interface Europe, Ltd., the lenders listed therein, SunTrust Bank,
Atlanta and the First National Bank of Chicago; and (ii) Term Loan Agreement, dated as
of June 25, 1997, among the Company, the lenders listed therein, SunTrust Bank, Atlanta
and the First National Bank of Chicago.
10.29 Agreement for the sale and purchase of the entire issued share
capitals of T. F. Firth & Sons Limited, Tayrich Limited and Vebe
Floorcoverings B.V., dated as of December 5, 1997, among
Readicut International PLC, Readicut Netherlands B.V., Interface Europe Ltd.
And Interface Europe B.V.
27.1 Financial Data Schedule.
</TABLE>
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and RAY C. ANDERSON
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) Effect of Other Termination Events. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Charles R. Eitel
Title: President
EXECUTIVE: /s/ Ray C. Anderson
Ray C. Anderson
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and RAY C. ANDERSON
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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;<PAGE>
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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Charles R. Eitel
Title: President
EXECUTIVE:
/s/ Ray C. Anderson
Ray C. Anderson
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and CHARLES R. EITEL
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) Effect of Other Termination Events. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Charles R. Eitel
Charles R. Eitel
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and CHARLES R. EITEL
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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
<PAGE>
than 51 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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
(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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Charles R. Eitel
Charles R. Eitel
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and BRIAN L. DEMOURA
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Brian L. DeMoura
Brian L. DeMoura
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and BRIAN L. DEMOURA
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Brian L. DeMoura
Brian L. DeMoura
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and DANIEL T. HENDRIX
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Daniel T. Hendrix
Daniel T. Hendrix
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and DANIEL T. HENDRIX
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Daniel T. Hendrix
Daniel T. Hendrix
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and GORDON D. WHITENER
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Gordon D. Whitener
Gordon D. Whitener
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and GORDON D.
WHITENER ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Gordon D. Whitener
Gordon D. Whitener
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and RAYMOND S. WILLOCH
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(ix) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ix) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans and Executive's Salary
Continuation Agreement with the Company).
4. Section 5(c)(x) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Raymond S. Willoch
Raymond S. Willoch
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and RAYMOND S.
WILLOCH ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or (B) (x), (y) or (z) of
this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
delete the references therein to paragraph (v) of said subsection
(c), as paragraph (v) has been deleted pursuant to the foregoing
paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Raymond S. Willoch
Raymond S. Willoch
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and JEFFREY A. GOLDBERG
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Jeffrey A. Goldberg
Jeffrey A. Goldberg
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and JEFFREY A.
GOLDBERG ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Jeffrey A. Goldberg
Jeffrey A. Goldberg
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and ALAN S. KABUS
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Alan S. Kabus
Alan S. Kabus
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and ALAN S. KABUS
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Alan S. Kabus
Alan S. Kabus
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and JOYCE D. LAVALLE
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) Effect of Other Termination Events. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or her
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Joyce D. LaValle
Joyce D. LaValle
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and JOYCE D. LAVALLE
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Joyce D. LaValle
Joyce D. LaValle
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and JOHN H. WALKER
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
<PAGE>
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. Item 10 (entitled "Grievance Procedure") of the
Schedule to Employment Agreement is hereby amended to add the
following sentence to such item: There are no collective
agreements applicable to Executive or which affect Executive's
terms of employment.
7. Item 12 (entitled "Place of Work") of the Schedule to
Employment Agreement is hereby amended to add the following
sentence to such item: Executive may be relocated and may be
required to work overseas for periods exceeding one month, but
there currently are no particulars to be entered in this regard.
8. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John H. Walker
John H. Walker
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between Interface, Inc. (the "Company") and John H. Walker
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;
(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 51 percent of the Voting Stock of the surviving or
<PAGE>
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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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
<PAGE>
(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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John H. Walker
John H. Walker
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and JOHN L. PARTRIDGE
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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
<PAGE>
be entitled to only (i) such salary, reimbursable
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. Item 10 (entitled "Grievance Procedure") of the
Schedule to Employment Agreement is hereby amended to add the
following sentence to such item: There are no collective
agreements applicable to Executive or which affect Executive's
terms of employment.
Item 12 (entitled "Place of Work") of the Schedule to
Employment Agreement is hereby amended to add the following
sentence to such item: Executive may be relocated and may be
required to work overseas for periods exceeding one month, but
there currently are no particulars to be entered in this regard.
7. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John L. Partridge
John L. Partridge
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and JOHN L. PARTRIDGE
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as 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 outstanding capital
stock entitled to vote for the election of directors ("Voting
Stock") of (A) the Company, or (B) any corporation which is the
surviving or resulting corporation, or the transferee
corporation, in a transaction described in clause (iii)(A) or
(iii)(B) immediately below;
(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 51 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
<PAGE>
least 51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of this
Agreement, (i) 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;
and (ii) all restrictions on and vesting requirements for 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 subsection (a) shall
constitute an amendment of Executive's stock option agreements
and restricted stock agreements issued under the Stock Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes hereof,
"Voluntary Termination" shall mean termination of employment that
is voluntary on the part of Executive, and either (A) is
subsequent to the Company providing notice to Executive, in
accordance with Section 2 of this Agreement, that the term of
this Agreement will cease to extend automatically, or (B) in the
judgment of Executive, is due to (x) 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; (y) a reduction in Executive's compensation or benefits,
or (z) 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 any of clauses (A) or (B) (x),
(y) or (z) of this subsection (b)(ii) shall not make Executive
ineligible to receive benefits under this Agreement.
<PAGE>
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
- 2 -<PAGE>
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John L. Partridge
John L. Partridge
- 3 -
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between INTERFACE, INC. (the "Company") and JOHN R. WELLS
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of<PAGE>
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John R. Wells
John R. Wells
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and JOHN R. WELLS
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;<PAGE>
(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 51 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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this<PAGE>
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ John R. Wells
John R. Wells
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of the 6th day of January, 1998, by and
between Interface, Inc. (the "Company") and Michael D. Bertolucci
("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Employment Agreement dated as of April 1, 1997 (the
"Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 5(c) of the Agreement is hereby amended to
delete the first sentence thereof in its entirety and substitute
the following in its place:
If, prior to the end of the term of this Agreement, the
Company terminates Executive's employment without "just
cause" (as defined in Section 5(d) below), or if a
"Voluntary Termination" occurs within 24 months
following the date of a "Change in Control" (as such
terms are defined in the Change in Control Agreement
between Executive and Company) or within six months
prior to the date of the Change in Control and is
related to such Change in Control, 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.
3. Section 5(c)(viii) of the Agreement is hereby deleted
in its entirety and the following is substituted in its place:
(viii) EFFECT OF OTHER TERMINATION EVENTS. If
Executive is terminated for just cause (as defined in
Section 5(d) below) 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 such salary,
reimbursable expenses and other amounts as may properly
be due Executive through Executive's last day of<PAGE>
employment. If Executive voluntarily resigns from
employment (other than a "Voluntary Termination" as
defined in the Change in Control Agreement), or his
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 only (i) such salary, reimbursable
expenses and other amounts as may be due Executive
through Executive's last day of employment; (ii) an
annual bonus for the year in which Executive's
employment terminates, prorated through the last day of
employment (the amount of said bonus to be determined
by the Company based on the audited year-end financial
results of the Company and paid promptly after such
results are determined); and (iii) in the case of
disability, such compensation as is provided by the
Company's short and long-term disability plans or, in
the case of death, such payments as are provided by 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 stock
plans, retirement plans).
4. Section 5(c)(ix) of the Agreement is hereby amended to
delete the last sentence thereof in its entirety and substitute
the following in its place:
In the event Executive's employment is terminated
without "just cause" (defined below), or a "Voluntary
Termination" (as defined in the Change in Control
Agreement) occurs, in either case 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.
5. Sections 7(a)(ii), 7(a)(iii), and 7(a)(vi) of the
Agreement are hereby amended to delete the words "expiration of
this Agreement or" each time such words appear in said clauses.
6. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.<PAGE>
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Michael D. Bertolucci
Michael D. Bertolucci
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Amendment to Change in Control Agreement ("Amendment")
is made and entered into as of the 6th day of January, 1998, by
and between INTERFACE, INC. (the "Company") and MICHAEL D.
BERTOLUCCI ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive did enter into that
certain Change in Control Agreement dated as of April 1, 1997
(the "Agreement"); and
WHEREAS, the parties hereto desire to modify the Agreement
in certain respects, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the same meanings ascribed
to such terms in the Agreement.
2. Section 3(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(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 (as
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
outstanding capital stock entitled to vote for the election
of directors ("Voting Stock") of (A) the Company, or (B) any
corporation which is the surviving or resulting corporation,
or the transferee corporation, in a transaction described in
clause (iii)(A) or (iii)(B) immediately below;<PAGE>
(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 51 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
51 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.
3. The reference in Section 3(h) of the Agreement to
"Amended and Restated Credit Agreement dated June 30, 1995" is
hereby changed to "Second Amended and Restated Credit Agreement
dated as of June 25, 1997".
4. Section 4(a) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(a) IMMEDIATE VESTING OF STOCK AWARDS. Upon the
occurrence of a Change in Control during the term of
this Agreement, (i) 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; and (ii) all restrictions on
and vesting requirements for 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 subsection (a) shall constitute
an amendment of Executive's stock option agreements and
restricted stock agreements issued under the Stock
Plans.
5. Section 4(b)(ii) of the Agreement is hereby deleted in
its entirety and the following is substituted in its place:
(ii) VOLUNTARY TERMINATION. For purposes
hereof, "Voluntary Termination" shall mean termination
of employment that is voluntary on the part of
Executive, and either (A) is subsequent to the Company
providing notice to Executive, in accordance with
Section 2 of this Agreement, that the term of this<PAGE>
Agreement will cease to extend automatically, or (B) in
the judgment of Executive, is due to (x) 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;
(y) a reduction in Executive's compensation or
benefits, or (z) 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 any of clauses (A) or
(B) (x), (y) or (z) of this subsection (b)(ii) shall
not make Executive ineligible to receive benefits under
this Agreement.
6. Section 4(c)(v) of the Agreement is hereby deleted in
its entirety. No change is made to the numbering of the
remaining clauses or paragraphs in Section 4(c) to preserve the
accuracy of cross-references to those paragraphs appearing
elsewhere in the Agreement.
7. Section 4(c) of the Agreement is hereby amended to
change the references therein to paragraph (v) of said subsection
(c), to paragraph (iv), as paragraph (v) has been deleted
pursuant to the foregoing paragraph 6 of this Amendment.
8. Section 4(d) of the Agreement is hereby deleted in its
entirety.
9. The Agreement, as expressly modified by this Amendment,
shall remain in full force and effect in accordance with its
terms and continue to bind the parties.
IN WITNESS WHEREOF, Executive has executed this Amendment,
and the Company has caused this Amendment to be executed by a
duly authorized representative, as of the date first set forth
above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
Title: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Michael D. Bertolucci
Michael D. Bertolucci
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (this "Agreement") is
made and entered into as of the 6th day of January, 1998, by and
between Interface, Inc., a Georgia corporation (the "Company"),
and ____________________________, a resident of ___________,
___________ ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company in
the capacity of ______________________________________;
WHEREAS, Employee has performed his duties in a capable and
efficient manner;
WHEREAS, the experience of Employee is such that assurance
of his continued service to the Company is considered essential
to its future growth and profits, and the Company desires to
retain the valuable services and business counsel of Employee and
to induce Employee to remain in his managerial and supervisory
capacity with the Company;
WHEREAS, the Company further wishes to retain Employee so as
to prevent a substantial financial loss which the Company would
incur if Employee left the employment of the Company and entered
the employment of a competitor;
WHEREAS, Employee is willing to continue in the employ of
the Company, provided the Company will agree to provide to
Employee and his beneficiaries an additional benefit in the form
of certain payments in the event of Employee's retirement,
disability or death;
WHEREAS, Employee is considered a highly compensated
employee or member of a select management group of the Company;
WHEREAS, the Company and Employee entered into a salary
continuation agreement effective as of ___________________, which
was previously amended and restated pursuant to an agreement
dated April 1, 1997 (the "Prior Agreement"), and now desire to
modify the Prior Agreement in certain respects; and
WHEREAS, this Agreement, which continues, amends and
restates the Prior Agreement in its entirety, shall be deemed
effective as of the original effective date (________________) of
the Prior Agreement.
NOW, THEREFORE, in consideration of the 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. DEFINITIONS. In addition to the terms defined
elsewhere in this Agreement, the following terms, when used with
an initial capital letter, shall have the meanings ascribed to
them below:
<PAGE>
(a) ANNUAL COMPENSATION means salary and cash bonus paid by
the Company to Employee for a particular calendar year, and
excludes compensation from stock options, restricted stock and
any other benefit or compensation program [and also shall not
include any bonus characterized as "extraordinary bonus" under
Employee's employment agreement with the Company]. (The cash
bonus applicable to a particular calendar year is the bonus paid
typically within the first calendar quarter of the following
year.)
(b) AUTHORIZED LEAVE OF ABSENCE means any period not to
exceed one year during which the Company, in its sole discretion,
permits Employee to be away from work and which the Company
designates as an "authorized leave of absence".
(c) BENEFICIARY means the person or persons designated (or
deemed designated) by Employee in accordance with the terms of
Section 4(b) hereof to receive any death benefit payable under
this Agreement upon Employee's death.
(d) CAUSE means the reason for termination of Employee's
employment is (i) Employee's fraud, dishonesty, gross negligence
or willful misconduct with respect to business affairs of the
Company, (ii) Employee's refusal or repeated failure to follow
the established lawful policies of the Company applicable to
persons occupying the same or similar positions; or
(iii) Employee's conviction of a felony or other crime involving
moral turpitude.
(e) CHANGE IN CONTROL 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 outstanding capital
stock entitled to vote for the election of directors ("Voting
Stock") of (A) the Company, or (B) any corporation which is the
surviving or resulting corporation, or the transferee
corporation, in a transaction described in clause (iii)(A) or
(iii)(B) immediately below;
(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 51 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 51 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.
(f) CLAIMS MANAGER means the ______________ of the Company
or such other executive officer of the Company as may be
designated by the Company's Chief Executive Officer or Board of
Directors to serve in such capacity (which designation shall be
communicated to Employee by written notice). In the absence of a
designated Claims Manager, the Board of Directors shall function
as Claims Manager.
(g) CODE means the Internal Revenue Code of 1986, as
amended.
(h) DISABILITY OR DISABLED means (i) with respect to the
first 60 months of the period in which Employee claims he is
unable to work, Employee's mental or physical condition that has
lasted for at least six continuous months, that appears to be
permanent or indefinite in nature and that prevents Employee from
performing all of the substantial and material duties of his
regular occupation; and (ii) with respect to the continuous,
succeeding period (after such initial 60 months) in which
Employee claims he is unable to work, Employee's mental or
physical condition resulting from an injury or sickness that
prevents Employee from performing all of the substantial and
material duties of any occupation for which he is reasonably
fitted by education, training or experience.
(i) EARLIEST RETIREMENT DATE means the first date on which
Employee both has attained age 55 (but is not yet age 65) and
completed 15 Years of Employment.
(j) EARLY RETIREMENT DATE means the date, on or after
Employee's Earliest Retirement Date but before his Normal
Retirement Date, on which Employee actually retires from the
employ of the Company (or, under certain circumstances where
Employee's actual employment has terminated but Employee is
deemed to be continuously employed, the date Employee elects to
"retire" and commence early retirement payments), as described in
Section 3 hereof.
(k) EARLY RETIREMENT PAYMENTS means the early retirement
salary continuation payments that will become payable to Employee
if he retires on his Early Retirement Date, as described in
Section 3 hereof.
(l) NORMAL RETIREMENT DATE means the first date on which
Employee both has attained age 65 and completed 15 Years of
Employment.
(m) PERMITTED HOLDERS means the individuals listed on
Schedule 10.11 to the Second Amended and Restated Credit
Agreement dated as of June 25, 1997, 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.<PAGE>
(n) SALARY CONTINUATION PAYMENTS means the salary
continuation payments that will become payable to Employee if he
retires on or after his Normal Retirement Date, as described in
Section 2 hereof.
(o) SCHEDULE A means "Schedule A - Schedule of Benefit
Amounts", a copy of which is attached to this Agreement and
incorporated herein by this reference.
(p) SCHEDULE B means "Schedule B - Beneficiary Designation
Form", a copy of which is attached hereto and incorporated herein
by this reference.
(q) VOLUNTARY TERMINATION means termination of employment
that is voluntary on the part of Employee, and either (A) is
subsequent to the Company providing notice to Employee, in
accordance with Section 2 of the Change in Control Agreement
between Employee and the Company, that the term of said Change in
Control Agreement will cease to extend automatically, or (B) in
the judgment of Employee, is due to (x) a reduction of Employee's
responsibilities, title or status resulting from a formal change
in such title or status, or from the assignment to Employee of
any duties inconsistent with Employee's title, duties or
responsibilities in effect within the year prior to the Change in
Control; (y) a reduction in Employee's compensation or benefits;
or (z) a Company-required involuntary relocation of Employee's
place of residence or a significant increase in Employee's travel
requirements.
(r) YEAR OF EMPLOYMENT means each annual period, beginning
on ________________ (that is, the date Employee first became
employed by the Company or one of its affiliates), during which
Employee is, or has been or is deemed to be continuously employed
by the Company or one of its affiliates. For purposes hereof,
Employee shall be deemed to be employed by the Company during any
Authorized Leave of Absence and any period of Disability.
Furthermore, if Employee's employment is terminated by the
Company without Cause, or if a Voluntary Termination occurs
within six months prior to, or within 24 months following, the
date of a Change in Control, Employee shall be deemed for
purposes of this Agreement as continuing to be actively employed
by the Company and his Years of Employment shall include the
period after any such termination.
2. NORMAL RETIREMENT BENEFIT.
(a) AMOUNT OF SALARY CONTINUATION PAYMENTS. If Employee
retires or becomes Disabled on or after his Normal Retirement
Date, the Company shall make Salary Continuation Payments to
Employee in the amount described under the heading entitled
"Salary Continuation Payments" in Schedule A.
(b) COMMENCEMENT; PRESERVATION. Employee's Salary
Continuation Payments shall commence within 30 days after
Employee's retirement and shall be made monthly thereafter for
and during the lifetime of Employee. If the Company terminates
Employee's employment without Cause (or if a Voluntary
Termination occurs within six months prior to, or within 24
months following, the date of a Change in Control) before
Employee's Normal Retirement Date, Employee nevertheless shall
remain eligible to receive Salary Continuation Payments as
described in Schedule A upon attainment of his Normal Retirement
Date; provided, however, that if at the time Salary Continuation
Payments first become payable to Employee the term of Employee's
<PAGE>
employment agreement with the Company has not yet expired and the
Company has an obligation under said employment agreement to
continue to pay amounts of salary and bonus to employee for all
or a portion of the remaining term of said employment agreement,
then the commencement of Salary Continuation Payments to Employee
hereunder shall be delayed until the earlier of (i) the end of
the term of said employment agreement for which payments of
salary and bonus are payable, or (ii) the date of the final
payment of such amounts.
(c) POST-RETIREMENT DEATH BENEFIT. In the event Employee
should die after his Salary Continuation Payments have commenced,
but before 120 payments have been made to or for his benefit,
then the unpaid balance of such 120 payments shall continue to be
paid by the Company to Employee's Beneficiary.
3. EARLY RETIREMENT BENEFIT.
(a) GENERAL ELIGIBILITY FOR BENEFIT. If Employee retires
or becomes Disabled on or after his Early Retirement Date, the
Company shall make Early Retirement Payments to Employee, subject
to the terms of this Section 3. For such Early Retirement
Payments to be due and payable, Employee must have given the
Company at least 90 days prior written notice of such early
retirement, and such notice shall specify Employee's Early
Retirement Date; provided, however, that if Employee is Disabled
he shall not be required to give such notice, and his Early
Retirement Payments automatically shall commence as of the later
of (i) the date he becomes Disabled, or (ii) his Earliest
Retirement Date.
(b) AMOUNT OF EARLY RETIREMENT PAYMENTS. The amount of
Employee's Early Retirement Payments will be the respective
percentage (set forth below opposite Employee's age on his Early
Retirement Date) of the Salary Continuation Payments which he
would have otherwise received if he was retiring on his Normal
Retirement Date:
Percentage of Salary
Age On Early Retirement Date Continuation Payments
---------------------------- ---------------------
55 50%
56 55%
57 60%
58 65%
59 70%
60 75%
61 80%
62 85%
63 90%
64 95%
(c) COMMENCEMENT; PRESERVATION. Employee's Early
Retirement Payments shall commence within 30 days after
Employee's Early Retirement Date and shall be made monthly
thereafter for and during the lifetime of Employee. If the
Company terminates Employee's employment without Cause (or if a
Voluntary Termination occurs within six months prior to, or
within 24 months following, the date of a Change in Control) on
or before Employee's Earliest Retirement Date, Employee
nevertheless shall remain eligible to elect and receive Early
Retirement Payments upon attainment of his Earliest Retirement
Date; provided, however, that if at the time Early Retirement
Payments first become payable to Employee the term of Employee's
employment agreement with the Company has not yet expired and the
<PAGE>
Company has an obligation under said employment agreement to
continue to pay amounts of salary and bonus to employee for all
or a portion of the remaining term of said employment agreement,
then the commencement of Early Retirement Payments to Employee
shall be delayed until the earlier of (i) the end of the term of
said employment agreement for which payments of salary and bonus
are payable, or (ii) the date of the final payment of such
amounts; and, provided further, in this case, the Company shall
calculate the percentage reduction applicable to Employee's
salary continuation benefit based on Employee's age on the date
Early Retirement Payments actually commence.
(d) REQUEST FOR DELAY OF EARLY RETIREMENT PAYMENTS. If, at
least 12 months before Employee otherwise would first be entitled
to any Early Retirement Payments, Employee makes an election to
defer his receipt of all of his Early Retirement Payments to a
date that is on or before the date he attains age 65, the Company
shall delay the commencement of benefits payable under this
Section 3 and shall calculate the percentage reduction (if any)
applicable to Employee's benefit based on Employee's age as of
the date he elects for his benefits hereunder to commence.
Employee may make two such elections to defer the commencement
of his Early Retirement Payments, but no such election shall
delay the commencement date beyond his Normal Retirement Date.
(e) POST-RETIREMENT DEATH BENEFIT. In the event Employee
should die after his Early Retirement Payments have commenced,
but before 120 payments have been made to or for his benefit,
then the unpaid balance of such 120 payments shall continue to be
paid by the Company to Employee's Beneficiary.
4. PRE-RETIREMENT DEATH BENEFIT.
(a) AMOUNT OF DEATH BENEFIT. If Employee dies (i) while
actively employed by the Company, (ii) during a Disability,
(iii) at any time after his termination without Cause, or after a
Voluntary Termination which occurred within six months prior to,
or within 24 months following, the date of a Change in Control,
or (iv) after his Early Retirement Date but before Salary
Continuation Payments or Early Retirement Payments have commenced
(in accordance with Section 3(d) above), the amount described
under the heading entitled "Death Benefit" in Schedule A shall be
paid monthly, commencing within 30 days after Employee's death,
in 120 payments over a 10-year period. Notwithstanding anything
in this Agreement to the contrary, once Employee commences
receiving Salary Continuation Payments or Early Retirement
Payments pursuant to the terms of Sections 2 or 3 hereof, no
payments shall be due or payable under this subsection, and the
death benefit payable to Employee's Beneficiary under this
Agreement shall be solely as described in Section 2 or 3, as
applicable.
(b) BENEFICIARY DESIGNATION. Employee shall designate, and
from time to time may redesignate, his Beneficiary by completing
the beneficiary designation form attached hereto as Schedule B,
or by notifying the Company in such other form and manner as the
Company may determine. In the event that (i) Employee dies
without designating a Beneficiary; (ii) the Beneficiary
designated by Employee is not surviving when a payment is to be
made to such person under this Agreement, and no contingent
Beneficiary has been designated; or (iii) the Beneficiary
designated by Employee cannot be located by the Company within
one year from the date benefits are to be paid to such person;
then, in any of such events, the Beneficiary of such Employee
<PAGE>
with respect to any benefits that remain payable under this
Agreement shall be Employee's surviving spouse, if there be one,
and if not, Employee's estate.
5. DISABILITY BENEFIT. If Employee becomes Disabled while
actively employed by the Company or following his termination by
the Company without Cause (or following a Voluntary Termination
which occurred within six months prior to, or within 24 months
following, the date of a Change in Control), the Company shall
pay to Employee monthly payments, retroactive to the date
Employee's Disabled condition commenced, for a period of up to 60
months, in the amount described under the heading entitled
"Disability Benefit" in Schedule A. Such payments shall commence
within 10 days after the expiration of the first six months of
Employee's Disability, with the first payment being the total
amount payable for such six-month period then just ended. If
Employee's Disability ends within such 60-month period, the
Company's obligation to make benefit payments under this
Section 5 with respect to the just-ended episode of Disability
shall cease immediately, whether or not Employee returns to work
with the Company. If, after the expiration of such 60-month
period of Disability during which such monthly payments are made,
Employee's Disability (as defined in Section 1(h)(ii) hereof)
continues, the Company will continue the monthly disability
payments until such Disability terminates. Notwithstanding
anything herein to the contrary, no disability payments (or, if
disability payments have begun, no further disability payments)
shall be due or payable under this Section 5 (whether during or
after the first 60 months of Employee's Disability) for any
period for which Salary Continuation Payments or Early Retirement
Payments are payable under Sections 2 or 3 hereof.
6. OTHER PROVISIONS RELATING TO BENEFITS.
(a) ACCELERATION OF PAYMENTS. The Company reserves the
right to accelerate the payment of any benefits payable under
this Agreement without the consent of Employee, his Beneficiary,
his spouse, the duly appointed representative of his estate or
any other person claiming through Employee. In the event of such
acceleration, the single sum present value amount payable shall
be determined by applying the mortality tables prescribed in Code
Section 417(e) and an interest rate that is the lesser of (i) six
percent or (ii) the interest rate used by the Pension Benefit
Guaranty Corporation (or its successor organization) as of the
first day of the calendar year in which the acceleration occurs
to value immediate annuities on termination of a Code Section
401(a) qualified defined benefit pension plan.
(b) INDEPENDENCE OF BENEFITS. The benefits payable under
this Agreement shall be independent of, and in addition to, any
other benefits or compensation payable by the Company to
Employee, whether as salary, bonus or otherwise. This Agreement
does not involve a reduction in salary or a foregoing of an
increase in future salary by Employee, nor does it in any way
affect or reduce the existing or future compensation or other
benefits of Employee.
(c) SPECIAL PROVISIONS RELATING TO CHANGE IN CONTROL.
Notwithstanding anything in this Agreement to the contrary, in
the event of a Change in Control, the benefit payable to Employee
under this Agreement (whether associated with or following a
termination without Cause; a Voluntary Termination which occurred
within six months prior to, or within 24 months following, the
date of the Change in Control; death; Disability; or retirement,
including early retirement -- as used herein, a "triggering
<PAGE>
event") shall be based on the greater of (i) the average Annual
Compensation paid by the Company for the three calendar years of
Employee's highest compensation during the last five full
calendar years preceding the date of the particular triggering
event or (ii) the average Annual Compensation paid by the Company
for the three calendar years of Employee's highest compensation
during the last five full calendar years preceding the date of
the Change in Control. The intent of this provision is to
establish a minimum or "floor" benefit level for Employee as of
the date of the Change in Control. In addition, in the event
Employee is terminated without Cause at any time following a
Change in Control (or a Voluntary Termination occurs within six
months prior to, or within 24 months following, the date of a
Change in Control), the benefit otherwise payable to Executive
(or his Beneficiary) pursuant to any triggering event shall be
increased by a percentage equal to the aggregate percentage
increases in the U.S. consumer price index - all cities - urban
consumers, published by the U.S. Department of Labor (or if no
longer published, such other index selected by the Company as a
fair and reasonable substitute), between the date of such
termination and the actual commencement of benefits.
7. CONDITIONS TO PAYMENT OF BENEFITS. The benefits
payable under this Agreement to Employee or his Beneficiary shall
be conditioned upon Employee complying with the following
provisions of this Section 7. In the event Employee fails to
comply with any such provision, only the future benefits (payable
after the date of such non-compliance) shall be subject to risk
of forfeiture for breach of this Agreement. Prior to terminating
benefits for an actual or alleged violation of subsection (b) or
(c) below, the Company must have first provided Employee with
written notice of the violation and Employee shall have failed to
cure or cease such violation within 30 days after his receipt of
such notice.
(a) CONTINUATION OF EMPLOYMENT. Employee shall be
continuously employed by the Company until Employee's Earliest
Retirement Date or his death, whichever first occurs. During any
Authorized Leave of Absence, any period of Disability and any
period following the Company's termination of Employee's
employment without Cause (or a Voluntary Termination by Employee
within six months prior to, or within 24 months following, the
date of a Change in Control), Employee will still be considered
to be in the continuous employment of the Company for purposes of
this Agreement.
(b) CONSULTATION SERVICES. Employee shall render such
reasonable business consulting and advisory services as the Board
of Directors of the Company by written request may call upon him
to provide, and as his health (in the opinion of Employee) may
permit, from time to time during the period from his retirement
(meaning, the date Employee begins to receive Salary Continuation
Payments or Early Retirement Payments) to the earlier of the date
of his death or Disability. In this regard, it is understood
that (i) such consulting and advisory services shall not
preclude, or be requested in a fashion which would inhibit,
Employee from engaging in other full-time employment not
competitive with the Company nor shall they require Employee to
be active in the Company's day-to-day activities or require
Employee to engage in any substantial travel, (ii) Employee shall
perform such services as an independent contractor, and
(iii) Employee shall be reimbursed for all ordinary and necessary
business expenses incurred in performing such services.
<PAGE>
(c) CONFLICT OF INTEREST. During his employment with the
Company, Employee shall not engage in any other business
enterprise without the prior written consent of the Company.
(The foregoing shall not be construed to preclude Employee from
serving on the Board of Directors of any other company or entity
not competitive with the Company or from performing services for
civic, social, religious or charitable purposes.) After his
retirement from the Company or after his Disability and while he
is receiving benefits hereunder, he shall not, without the
Company's prior written consent, engage in any business activity
which is in competition with the Company.
(d) SUICIDE. Employee shall not commit suicide within two
years after the original effective date of the Prior Agreement,
whether or not Employee is then sane or insane.
8. NATURE OF OBLIGATIONS.
(a) CURRENTLY UNFUNDED. The Company's obligations under
this Agreement shall be unfunded and unsecured promises to pay
the benefits provided for hereunder. Except as provided in
subsection (b) hereof, in any other agreement between the Company
and Employee, or by the terms of any plan sponsored by the
Company, the Company shall not be obligated to fund its
obligations under this Agreement; provided, however, that even if
not otherwise required to do so, the Company, in its sole
discretion, may elect to fund its obligations under this
Agreement in whole or in part.
(b) FUNDING UPON A CHANGE IN CONTROL. Notwithstanding
anything to the contrary contained in this Agreement, immediately
upon and coincident with a Change in Control, the Company shall
contribute to an irrevocable grantor trust (generally referred to
as a "rabbi trust"), for which an independent bank or financial
institution serves as the trustee, an amount of cash equal to the
current single sum present value of the Company's obligation
hereunder to Employee, assuming Employee were to remain actively
employed until age 65. Such single sum present value amount
shall be measured as of the date the Change in Control occurs and
shall be determined by applying the mortality tables prescribed
in Code Section 417(e) and an interest rate that is the lesser of
(i) six percent or (ii) the interest rate used by the Pension
Benefit Guaranty Corporation (or its successor organization) as
of the first day of the calendar year in which the Change in
Control occurs to value immediate annuities on termination of a
Code Section 401(a) qualified defined benefit pension plan. The
terms of such rabbi trust shall require the trustee thereof to
make payments in accordance with the terms of this Agreement and
shall prohibit the trustee from permitting a reversion to the
Company of any trust assets until the Company's obligations under
this Agreement shall be satisfied in full. The terms of the
trust also shall prohibit the investment in any equity interests
of the Company with any cash (or investment earnings attributable
thereto) contributed with respect to the obligations hereunder.
Notwithstanding this mandatory funding of the rabbi trust, if the
assets of the trust are insufficient or the trustee for any
reason is unable or unwilling to make the payments required
hereunder, the Company shall make such payments.
(c) INVESTMENTS. It is understood that the Company may
make investments so that it will have segregated assets to help
pay its obligations hereunder; and, in this regard, Employee
hereby agrees to submit to appropriate medical examinations,
supply such information and execute such documents, as the
<PAGE>
Company may reasonably require with respect to such investments.
It is understood and agreed that Employee shall have no
beneficial or other interest in any such investment, which,
subject to Section 8(a) and (b) above, at all times shall remain
a part of the Company's general assets accessible to its
creditors. Accordingly, subject to Section 8(a) and (b) above,
the rights of Employee, Employee's Beneficiary or any other
person claiming through Employee under this Agreement shall be
solely those of an unsecured general creditor of the Company.
Employee, his Beneficiary or any other person claiming through
Employee, shall only have the right to receive from the Company
those payments which are specified under this Agreement. No asset
used or acquired by the Company in connection with its
obligations and liabilities hereunder shall be deemed to be held
under any trust for the benefit of Employee or his Beneficiary
(except as provided in Section 8(a) and (b) above), nor shall any
such asset be considered as security for the performance of the
obligations and liabilities of the Company hereunder.
9. EMPLOYMENT RIGHTS. This Agreement shall not itself be
deemed to constitute a contract of employment between the Company
and Employee, and shall not create any rights in Employee to
continue in the Company's employ for any specific period of time
or any other rights in Employee or obligations on the part of the
Company, except as are expressly set forth herein. No provision
hereof shall restrict the right of the Company to discharge
Employee or restrict the right of Employee to terminate his
employment with the Company.
10. NONALIENATION OF BENEFITS. No right or benefit under
this Agreement shall be subject to anticipation, alienation,
sale, assignment, pledge, encumbrance or charge, and any attempt
to anticipate, alienate, sell, assign, pledge, encumber or charge
the same shall be void. No right or benefit hereunder shall in
any manner be liable for or subject to the debts, contracts,
liabilities or torts of Employee or his Beneficiary. If Employee
or his Beneficiary shall become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge
any right or benefit hereunder, then such right or benefit shall,
in the discretion of the Board of Directors of the Company, cease
and terminate; and in such event, the Company may hold or apply
same or any part thereof for the benefit of Employee or his
Beneficiary, his spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Board of
Directors of the Company may deem proper under the then existing
circumstances. Notwithstanding the foregoing, the Company shall
have the right, exercisable solely in its discretion, to offset
against any benefits payable hereunder, at the time same become
payable to Employee (or to his Beneficiary in the event of his
death), any then existing indebtedness of any kind of Employee to
the Company, whether or not such indebtedness is otherwise deemed
due and payable. This right of offset shall be void and of no
effect in the event of a Change in Control, in which event the
Company shall pay to Employee all of the benefits due and owing
under this Agreement, but without prejudice to the right of the
Company to take separate action to collect payment of any
indebtedness owed by Employee to the Company.
11. AGREEMENT BINDING ON SUCCESSORS. This Agreement is
solely between the Company and Employee, and Employee and his
Beneficiary shall have recourse only against the Company and its
successors and assigns for enforcement hereof (together with
rights against and with respect to the "rabbi trust", if
established pursuant to Section 8(b) hereof). This Agreement will
be binding upon Employee's Beneficiary, heirs and personal
<PAGE>
representatives and upon the successors and assigns of the
Company. 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
(which assumption shall not negate the obligation of the Company
to immediately fund its obligations hereunder in the event of a
Change in Control, as provided in Section 8(b) hereof), and the
Company shall obtain the express assumption of this Agreement by
any such successor.
12. CLAIMS MANAGER AND CLAIMS PROCEDURE.
(a) CLAIMS PROCEDURE. Benefits shall be paid in accordance
with the provisions of this Agreement. The Claims Manager shall
be the Company's representative for purposes of making all
determinations as to the right of Employee or any other person to
a benefit under this Agreement, and any requests for such a
benefit must be made in a writing mailed or delivered to the
Claims Manager. If such a request is wholly or partially denied,
notice of the decision shall be mailed to the claiming person no
later than 45 days after the receipt of the request by the Claims
Manager. Such a notice of denial shall include the following:
(i) The specific reason or reasons for such denial;
(ii) The specific reference to pertinent
provisions of this Agreement on which the denial is based;
(iii) A description of any additional material or
information necessary for the claimant to submit to perfect the
claim and an explanation of why such material or information is
necessary; and
(iv) A description of this Agreement's claim
review procedure.
(b) CLAIM REVIEW PROCEDURE. The claim review procedure is
available upon written request by the claimant to the Claims
Manager within 60 days after receipt by the claimant of written
notice of the denial of the claim, and includes the right to
examine pertinent documents and Company data and submit issues
and comments in writing to the Claims Manager. The decision on
review will be in writing and written in a manner calculated to
be understood by the claimant, will be made within 30 days after
receipt of the request for review (unless special circumstances
warrant an extension of time not to exceed an additional 30
days), and will include specific reasons for the decision with
references to the specific Agreement provisions on which the
decision is based.
13. GENERAL PROVISIONS.
(a) NOTICES. Except as may be otherwise specified herein,
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:
<PAGE>
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 Employee: ______________________
at the last address and fax number
shown on the records of the Company
Employee 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) ENTIRE AGREEMENT; GOVERNING LAW. This Agreement
contains the entire agreement between the parties hereto relating
to the matters provided herein, and no representation or warranty
not expressly contained or incorporated by reference herein is
made by either party. This Agreement shall not be modified or
amended in any manner except by an instrument in writing executed
by the parties or their respective successors in interest, which
makes reference to this Agreement. To the extent not controlled
by the terms of the Employee Retirement Income Security Act of
1974, as amended, this Agreement shall be governed by, and
construed and enforced in accordance with, Georgia law. The
provisions of this Agreement are severable, and the validity or
invalidity of one or more of the provisions herein shall not have
any effect upon the validity or enforceability of any other
provision.
(c) AFFILIATES. For purposes of this Agreement, Employee
shall be considered as being employed by the Company if he is
employed by any corporation owned or controlled by the Company
(such as a subsidiary, or a subsidiary of a subsidiary) or a
corporation which is a successor of the Company.
IN WITNESS WHEREOF, the individual party has executed this
Agreement, and the corporate party has caused this Agreement to
be executed by its duly authorized officers, as of the date first
written above.
INTERFACE, INC.
By: ____________________________
Ray C. Anderson, Chairman
and Chief Executive Officer
Attest: _________________________
Raymond S. Willoch, Secretary
EMPLOYEE:
_______________________
_______________________<PAGE>
SCHEDULE A
SCHEDULE OF BENEFIT AMOUNTS
Salary Continuation Payments
----------------------------
A monthly payment equivalent to the amount which is 1/12th
of 40% of the average Annual Compensation paid by the Company for
the three calendar years of Employee's highest compensation
during the last five full calendar years of Employee's employment
with the Company ending on or prior to the effective date of
Employee's retirement. (For the avoidance of doubt, in the event
the Company terminates Employee's employment without Cause, the
benefit payable hereunder shall be based on the three years of
highest compensation during the last five full calendar years
preceding the date of termination.)
Death Benefit
-------------
A monthly payment equivalent to the amount which is 1/12th
of 40% of the average Annual Compensation paid by the Company for
the three calendar years of Employee's highest compensation
during the last five full calendar years of Employee's employment
with the Company ending on or prior to the date of Employee's
death. (For the avoidance of doubt, in the event the Company
terminates Employee's employment without Cause prior to
Employee's death, the benefit payable hereunder shall be based on
the three years of highest compensation during the last five full
calendar years preceding the date of termination.)
Monthly Disability Benefit
--------------------------
Employee's monthly disability payment shall be that
percentage of his compensation at the time of commencement of
Disability which, combined with all other Company-sponsored
disability security payments (excluding Social Security) then
being paid to Employee (or to which he is entitled), equals 66 %
of the compensation payable by the Company to Employee at the
commencement of such Disability. For purposes of this section,
"compensation" shall have the same meaning as in the Company's
disability insurance policy covering Employee at the time his
Disability commenced, and if no such policy is then in effect or
in the event the Company has terminated Employee's employment
without Cause prior to such Disability, shall be construed to be
average Annual Compensation as described for the benefits above
(i.e., average of three years of highest compensation during the
last five full calendar years of employment).
Change in Control
-----------------
Notwithstanding anything to the contrary contained herein,
in the event of a Change in Control, the benefits described in
this Schedule A are subject to certain protections and
enhancements as described in Sections 6(c), 8(b) and 10 of the
Agreement.
<PAGE>
SCHEDULE B
BENEFICIARY DESIGNATION FORM
/ / New Election / / Change of Election Effective Date:
_____________________________________________________________________________
A. EMPLOYEE INFORMATION
Name: _______________________________________________________________
Address: ____________________________________________________________
____________________________________________________________
Social Security No.: _______________________________________________
______________________________________________________________________________
B. BENEFICIARY DESIGNATION
I hereby revoke all previously designated beneficiaries, if any, and
hereby direct that, upon my death, any death benefit payable under
the Salary Continuation Agreement between Interface, Inc. and me,
dated as of January 6, 1998, to my survivor(s), shall be paid to the
following person (persons) as my primary or secondary beneficiary
(beneficiaries) in the following proportions:
Primary
Beneficiary(ies) - Name & Address Relationship Social Security # Percentage
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Secondary
Beneficiary(ies) - Name & Address Relationship Social Security # Percentage
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
C. SIGNATURE OF EMPLOYEE
I hereby acknowledge that I have read the instructions attached to
this form and that all of the information I have provided on this
form is true and correctly indicates my wishes.
_____________________________________
(Employee's Signature)
_____________________________________
(Date)<PAGE>
INSTRUCTIONS
BE SURE THAT YOU READ THESE INSTRUCTIONS BEFORE COMPLETING THIS
BENEFICIARY DESIGNATION FORM.
______________________________________________________________________________
GENERAL INSTRUCTIONS
Under the terms of the Salary Continuation Agreement, you have the right
to designate the person or persons who will be your beneficiary and
receive your death benefit. To designate one or more beneficiaries, you
should complete this form.
______________________________________________________________________________
EMPLOYEE INFORMATION
Fill in the requested information completely and accurately.
______________________________________________________________________________
BENEFICIARY DESIGNATION
You may appoint one or more primary beneficiaries and one or more
secondary beneficiaries. A secondary beneficiary will only receive your
unpaid death benefit if your primary beneficiaries do not survive you.
If you designate two or more primary beneficiaries and one of the primary
beneficiaries does not survive you, the remaining primary beneficiary or
beneficiaries will receive your unpaid death benefit. The secondary
beneficiary will only receive benefits if no primary beneficiaries are
surviving.
You may designate the percentage of your unpaid death benefit each
beneficiary should receive. If you do not so indicate, your death
benefit will be divided equally.
_______________________________________________________________________________
SIGNATURE OF EMPLOYEE
The form will be rejected if you do not sign it.
CONSENT AND WAIVER
THIS CONSENT AND WAIVER made and given effective as of
March 20, 1998, pursuant to (i) that certain 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 therein, SUNTRUST BANK, ATLANTA, and THE FIRST
NATIONAL BANK OF CHICAGO, as Co-Agents, and SUNTRUST BANK,
ATLANTA, as Collateral Agent, as amended by that certain First
Amendment to Second Amended and Restated Credit Agreement dated
as of December 2, 1997 (as so amended, the "Credit Agreement"),
and (ii) that certain Term Loan Agreement dated as of June 25,
1997, among INTERFACE, INC., the Lenders listed therein, SUNTRUST
BANK, ATLANTA, as Administrative Agent, THE FIRST NATIONAL BANK
OF CHICAGO, as Syndication Agent, and SUNTRUST BANK, ATLANTA, as
Collateral Agent, as amended by that certain First Amendment to
Term Loan Agreement dated as of December 2, 1997 (as so amended,
the "Term Loan Agreement"). Capitalized terms used in this
Consent and Waiver that are defined or referred to in the Credit
Agreement or Term Loan Agreement are used herein with the
respective meanings provided for such terms in the Credit
Agreement or Term Loan Agreement.
Interface has advised the Co-Agents and the Lenders of its
intent to issue pursuant to a public offering its Senior Notes in
an aggregate principal amount up to $150,000,000, such Senior
Notes to be repayable in a single installment on or about the
tenth anniversary of the date of issuance thereof and to be
guaranteed by some or all of the Guarantors (collectively, the
"Senior Notes"). Interface has further advised the Co-Agents and
the Lenders that the indenture pursuant to which the Senior Notes
will be issued (the "Senior Notes Indenture") will restrict in
certain respects the creation or existence of Liens on assets of
the Consolidated Companies contrary to the provisions of Section
9.11 of the Credit Agreement and Section 7.11 of the Term Loan
Agreement. Interface has requested that the Lenders consent to
the issuance of the Senior Notes and waive any Default or Event
of Default that would otherwise occur or exist pursuant to
Sections 9.01 and 9.11 of the Credit Agreement and Sections 7.01
and 7.11 of the Term Loan Agreement as a result of the incurrence
of the Indebtedness evidenced by the Senior Notes and the
accompanying Guaranties and the restrictions on the creation or
existence of Liens contained in the Senior Notes Indenture.
The undersigned Lenders hereby consent to the issuance by
Interface of the Senior Notes on or before April 30, 1998, in an
aggregate principal amount not to exceed $150,000,000, and hereby
agree to waive any Default or Event of Default that would
otherwise occur or exist pursuant to Sections 9.01 and 9.11 of
the Credit Agreement or Sections 7.01 and 7.11 of the Term Loan
Agreement as a result of the incurrence of the Indebtedness
evidenced by the Senior Notes and the accompanying Guaranties and
the restrictions on the creation or existence of Liens contained
in the Senior Notes Indenture, provided that (i) neither the
Senior Notes nor the accompanying Guaranties shall be secured by
a Lien on any property or assets of Interface or any of its
Subsidiaries, (ii) the Senior Notes shall not be guaranteed by
any Person other than one or more of the Guarantors as defined in
the Credit Agreement and Term Loan Agreement, (iii) the Senior
<PAGE>
Notes Indenture will not prohibit or restrict the creation or
existence of Liens on the property or assets of Interface or any
of its Subsidiaries to secure Indebtedness arising under the
Credit Agreement, Term Loan Agreement, or FNBC Currency Contract
(although such Senior Notes Indenture may provide that any such
security shall equally and ratably secure the Senior Notes), (iv)
the Senior Notes and Senior Notes Indenture will contain
covenants (including financial and negative covenants) and events
of default that are no more restrictive in any material respect
as to Interface and its Subsidiaries than the analogous covenants
and events of default contained in the Credit Agreement and Term
Loan Agreement, as determined by the Co-Agents, and (v) the
proceeds from the issuance of the Senior Notes, net of all
underwriting discounts and out-of-pocket costs, fees and expenses
incurred by Interface in connection with the issuance and sale of
the Senior Notes shall be used to repay amounts outstanding as
Domestic Revolving Loans and/or Multicurrency Revolving Loans
under the Credit Agreement, together with all accrued and unpaid
interest on the principal amount of such Loans being repaid and
all related costs and expenses required to be paid in connection
therewith under the terms of the Credit Agreement.
The Co-Agents, pursuant to Section 9.14 of the Credit
Agreement and Section 7.14 of the Term Loan Agreement, hereby
consent to Interface causing the Indebtedness evidenced by the
Senior Notes to become "Designated Senior Indebtedness" as
provided in the Senior Subordinated Notes Indenture.
The foregoing consent and waiver shall not be deemed to
constitute a waiver of any other covenant or term of the Credit
Agreement or the Term Loan Agreement and, except for such waiver,
the Credit Agreement and the Term Loan Agreement remain in full
force and effect in accordance with their respective terms.
This Consent and Waiver shall be effective as of the date
specified above upon the execution hereof by Lenders constituting
the "Required Lenders" as provided in each of the Credit
Agreement and the Term Loan Agreement.
SUNTRUST BANK, ATLANTA
By: /s/ Thomas R. Banks
Name: Thomas R. Banks
Title: Assistant Vice President
By: /s/ Jeffrey L. Seavers
Name: Jeffrey L. Seavers
Title: V.P.
- 2 -<PAGE>
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Molly Moranski
Name: Molly Moranski
Title: Authorized Agent
ABN AMRO BANK N.V.
By: /s/ G. Mark Clegg, Jr.
Name: G. Mark Clegg, Jr.
Title: Vice President
By: /s/ Larry K. Kelley
Name: Larry K. Kelley
Title: Group Vice President
THE BANK OF TOKYO-MITSUBISHI,
LTD., ALANTA AGENCY
By: /s/ Brandon A. Meyerson
Name: Brandon A. Meyerson
Title: Assistant Vice President
CIBC, INC.
By: /s/ CYD Petre
Name:CYD Petre
Title: Executive Director, CIBC Oppenheimer
Corp., AS AGENT
CREDITANSTALT-BANKVEREIN
By: /s/ Stephen W. Hipp
Name: Stephen W. Hipp
Title: Associate
By: /s/ Scott
Name: Scott
Title: VP
<PAGE>
CREDIT LYONNAIS ATLANTA AGENCY
By: /s/ David M. Cawrse
Name: David M. Cawrse
Title: First Vice President & Manager
FIRST UNION NATIONAL BANK
By: /s/ Daniel E. Evans
Name: Daniel E. Evans
Title: Senior Vice President
FLEET BANK OF MAINE
By: /s/ Neil C. Buiteguys
Name: Neil C. Buiteguys
Title: Vice President
NATIONSBANK, N.A.
By: /s/ David H. Dinkins
Name: David H. Dinkins
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Robert J. Mitchell, Jr.
Name: Robert J. Mitchell, Jr.
Title: Vice President
THE SUMITOMO BANK LIMITED
By: /s/ Sybil H. Weldon
Name: Sybil H. Weldon
Title: V.P. & Manager
By: /s/ Roger N. Arsham
Name: Roger N. Arsham
Title: Vice President
<PAGE>
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Douglas W. Strickland
Name: Douglas W. Strickland
Title: VP
By: ___________________________
Name:
Title:
- 5 -
Date : 12 December 1997 CONFORMED COPY
DATED 5th December 1997
----------------------------------
(1) READICUT INTERNATIONAL PLC
(2) READICUT NETHERLANDS B.V.
(3) INTERFACE EUROPE LIMITED
(4) INTERFACE EUROPE B.V.
----------------------------------------
AGREEMENT
for the sale and purchase of the
entire issued share capitals of
T F Firth & Sons Limited, Tayrich Limited
and Vebe Floorcoverings B.V.
-----------------------------------------
EVERSHEDS
Solicitors
Cloth Hall Court
Infirmary Street
LEEDS
LS1 2JB
<PAGE>
CONTENTS
Clause Page No.
- ------ --------
1. Interpretation
2. Sale and purchase
3. Consideration
4. Warranties
5. Restrictive covenants
6. Conditions and Completion
7. Announcements
8. Costs
9. Pensions and Property
10. Notices
11. Transitional information technology arrangements
12. Specific Indemnities
13. General
SCHEDULE 1
Details of the English Companies
Details of other English Group Members
SCHEDULE 2
Details of the Dutch Company
Details of other Dutch Group Members
SCHEDULE 3
Part 1 The English Property
Part 2 The Dutch Property
SCHEDULE 4
Part 1 English Non -Taxation Warranties
Part 2 Dutch Non -Taxation Warranties
Part 3 German Non-Taxation Warranties
SCHEDULE 5
Taxation
Part 1 - Interpretation
Part 2 - Tax Covenant
Part 3 - Limitations of Vendor's Liability
Part 4 - Corporation Tax Returns and Conduct of
Taxation Affairs
Part 5 - General
Part 6 - English Taxation Warranties
Part 7 - Dutch Taxation Warranties
SCHEDULE 6
Adjustment of Initial Consideration in
relation to the English Shares and the Dutch Shares
SCHEDULE 7
Limitation of Liability
SCHEDULE 8
UK Pension Transfer Arrangements
SCHEDULE 9
Trade Names
SCHEDULE 10
Environmental Indemnity
Agreed Form Documents
- ---------------------
1. Property Plan
2. Pensions actuaries letter
3. The Lease
4. The Supply Letter
5. The Original Disclosure Letter
6. The Guarantee
<PAGE>
THIS AGREEMENT is made on 5 December 1997
- --------------
BETWEEN
- -------
(1) READICUT INTERNATIONAL PLC (registered number 468624)
whose registered office is at Clifton Mills, Brighouse,
West Yorkshire HD6 4ET (the "First Vendor");
(2) READICUT NETHERLANDS B.V. (a company limited by shares
incorporated under the laws of the Netherlands and
registered at the Amsterdam Trade Registry under number
33210840 whose registered office is at Atrium Buildings,
Strawinskylaan 3037, 10772X Amsterdam, the Netherlands
(the "Second Vendor");
(3) INTERFACE EUROPE LIMITED (registered number 309779) whose
registered office is at Shelf Mills, Shelf, Halifax, West
Yorkshire HX3 7PA (the "First Purchaser"); and
(4) INTERFACE EUROPE B.V. (a company limited by shares
incorporated under the laws of the Netherlands and
registered at the Arnheim Trade Registry under number
64240) whose registered office is at Industrielaan 15, PO
Box 16, 3925, 2g Scherpenzeel, the Netherlands (the
"Second Purchaser").
OPERATIVE CLAUSES
- -----------------
1. Interpretation
--------------
In this Agreement:-
1.1 the following expressions have the following meanings
unless inconsistent with the context:-
Expression Meaning
---------- -------
"the Act" The Companies Act 1985
"Agreed Rate" 1.5% above LIBOR per annum
"Business Day" Any day (other than Saturday or Sunday)
on which Clearing Banks are open for a
full range of banking transactions
"Circular" The circular to be despatched to the
shareholders of the First Vendor as
referred to in clause 6.2 the final
draft of which is annexed hereto
"Clearing Bank" A bank which is a member of CHAPS
Clearing Company Limited
<PAGE>
"Completion" Completion of the sale and purchase in
accordance with clause 6
"Computer Systems" The computer systems used by the Group
Member at Completion, or computer
processors, associated and peripheral
equipment, computer programs and
related technical documentation, in
each case in the possession or under
the control of the Group Member at
Completion
"Confidential Information" All information of a confidential
nature or marked confidential which
is not in the public domain and
which relates to the business
customers or financial affairs of
the English Group Members and the
Dutch Group Members comprising:-
(i) future projects, business
development or planning, commercial
relationships and negotiations;
(ii) manufacturing and technical
processes;
(iii) information relating to the
employees of each
Group Member; and
(iv) the marketing of goods or
services including, without limitation,
customer, client and supplier lists,
price lists, sales targets, sales
statistics, market share statistics,
market research reports and surveys and
advertising or other promotional
materials and details of contractual
arrangements and any other matters
concerning the clients or customers of
or other persons having dealings with
the English Group Members and/or the
Dutch Group Members
"the Confirmed Letter of
Credit" The irrevocable confirmed
letter of credit in the agreed terms in
favour of the Vendors and given by Sun
Trust Bank and confirmed by Barclays
Bank PLC relating to the obligation of
the Purchasers to pay the Deferred
Consideration
2<PAGE>
"the Consideration" Together the English Shares'
Consideration and the Dutch Shares'
Consideration
"Deferred Consideration" Shall have the meaning ascribed to it
in clause 3.3
"the Original Disclosure
Letter" The letter having the same
date as this Agreement from
the Vendors to the Purchasers
qualifying the Warranties
given as at the date of this
Agreement
"Divisional Directors" Each of Malcolm Farrar, Lindsay
Parnell, David Melbourne, Peter
Aspinall, Paul Wiseman, Don Wellings,
Michaela Welby, Jeremy Earle, David
Booth, Geoff Pickless, John Stocks and
Terry Evans in respect of the English
Group Members and each of Hans
Holtrust, Wim Nieuwenhuijzen, H.
Timmerman, W. Burmanje, H. Strickers,
H. Hulleman and Jan van der Pijpekamp
in respect of the Dutch Group Members
(other than the German Company) and
Hans Holtrust and J. Veldhoven in
respect of the German Company
"the Dutch Company" Vebe Floorcoverings B.V, a company limited by
shares incorporated under the laws of The
Netherlands and registered at the Genemuiden
Trade Registry under number 22291 and whose
registered office is at 8281 JV Genemuiden,
The Netherlands
"the Dutch Group" Together the Dutch Company and each other
company details of which are set out in
Schedule 2
"Dutch Indebtedness" The total indebtedness of each Dutch Group
Member to Rabobank or any other bank or other
financial institution at Completion (but for
the avoidance of doubt excluding any hire
purchase, finance lease or other similar
agreement)
"Dutch Group Member" Any company which is a member of the Dutch
Group
"the Dutch Property" The property specified in Part 2 of Schedule
3 (and, if more than one, each such property)
and each and every part of such property
3<PAGE>
"the Dutch Shares" All the issued shares in the capital of the
Dutch Company
"the Dutch Shares' The consideration for the sale of the Dutch
Consideration" Shares as stated in clause 3.1.2
"the Dutch Taxation Warranties" The warranties set out in Part 7 of
Schedule 5 relating to the Dutch
Group (save for the German Company)
"the Dutch Warranties" The Dutch Taxation Warranties and the
warranties set out or referred to in
clause 4, (insofar as they relate to Part 2
of Schedule 4) and Part 2 of Schedule 4
"Encumbrance" A mortgage, charge, pledge, lien, option,
restriction, equity, right to acquire, right
of pre-emption, third party right or
interest, other encumbrance or security
interest of any kind (including, without
limitation, a title transfer and retention
arrangement)
"the English Companies" T F Firth & Sons Limited, registered number
314535 whose registered office is at Clifton
Mills, Brighouse and Tayrich Limited,
registered number 1332723 whose registered
office is at JHS House, Gerard, Lichfield
Road Industrial Estate, Tamworth,
Staffordshire B79 7UW
"the English Group" Together the English Companies and each other
company details of which are set out in
Schedule 1
"English Group Member" Any company which is a member of the English
Group
"the English Property" The property (including property situated in
England and Scotland) specified in Part 1 of
Schedule 3 (and, if more than one, each such
property) and each and every part of such
property
"the English Shares" All the issued shares of each of the English
Companies
4<PAGE>
"the English Shares' The consideration for the sale of the English
Consideration" Shares as stated in clause 3.1.1
"the English Taxation
Warranties" The warranties set out in Part 6 of
Schedule 5 relating to the English
Group
"the English Warranties" The English Taxation Warranties and the
warranties set out or referred to in clause
4 (insofar as they relate to of Part 1 of
Schedule 4) and Part 1 of Schedule 4
"the Final Disclosure Letter" The letter to be given as at the date
of Completion from the Vendors to the
Purchasers qualifying the Warranties
when repeated at Completion
" Firth Shares" All the issued shares in T F Firth & Sons
Limited, being one of the English Companies
"German Company" Vebe Floorcoverings GmbH, whose details are
set out in Schedule 2
"German Warranties" The warranties set out or referred to in
clause 4 (insofar as they relate to Part 3
of Schedule 4) and Part 3 of Schedule 4
relating to the German Company
"Group Member" Together any of the English Group Members
and the Dutch Group Members
"Intellectual Property" Patents, inventions, know how, trade secrets,
registered designs, copyrights, design
rights, rights affording equivalent
protection to copyright and design rights,
topography rights, trade marks, service
marks, business names, trade names, moral
rights, and registration or an application to
register any of the aforesaid items, rights
in the nature of the aforesaid items in any
country and rights to sue for passing off or,
where they exist, rights to sue for unfair
competition
"the Lease" The lease of the land comprising the head
office and warehousing of Firth Carpets
Limited at Clifton Mills, Bailiff Bridge,
Brighouse (as more particularly described in
the lease) in the agreed terms at the date of
the Agreement to be entered into between (1)
Readicut International PLC and (2) Firth
Carpets Limited on Completion.
5<PAGE>
"LIBOR" The three month Sterling BBA LIBOR as quoted
on page 3750 of the Telerate screen or if
such page is unavailable the interest rate at
which Sterling deposits are perceived to be
generally available by leading banks in the
London Interbank Market at or about 11.00
a.m. on the first day of that period for
delivery on that day;
"the London Stock Exchange" London Stock Exchange Limited
"Management Accounts" The unaudited balance sheet and profit and
loss account of each of the English Group
Members and Dutch Group Members in the agreed
form as at and for the period from 1 April
1997 to 31 October 1997
"the Pension Schemes" (i) the Readicut International Pension Fund;
and
(ii) the Readicut International Executive
Pension Scheme
"Prohibited Area" Europe, China (including Hong Kong), the
Phillippines, Indonesia, Malaysia and
Singapore
"Prohibited Business" The manufacture, development, sale, marketing
and distribution of the Prohibited Products
(but for the avoidance of doubt excluding (a)
the manufacture, development, sale, marketing
and distribution of loose rugs and (b)
excluding the manufacture, development, sale,
marketing and distribution of raw materials
components which are in turn used by
independent third parties in the manufacture
of woven, tufted and fibre bonded carpets by
those third parties and (c) excluding the
development as a raw materials component
supplier of non woven, tufted and fibre
bonded carpets but only for the purposes of
sampling)
6<PAGE>
"Prohibited Products" Woven, tufted and fibre bonded carpets,
(including but not limited to) broadloom
carpeting (both 2 metre and 4 metre) and
carpet tiling
"the Purchasers" Together, the First Purchaser and the Second
Purchaser
"the Purchasers' Solicitors" Dibb Lupton Alsop of 117 The Headrow,
Leeds LS1 5JH and Nauta Dutilh of 1007
JC Amsterdam Prinses, Irenestraat 59,
Amsterdam
"the SB Supply Agreement" The supply agreement in the agreed
terms made between (1) Stonehouse
Battye Limited, and (2) Firth Carpets
Limited to be entered into on
Completion
"the SB Supply Letter" The letter issued on the date hereof setting
out the main terms of the SB Supply Agreement
"the Shares" Together the English Shares and the Dutch
Shares
"Specific Indemnities" The specific indemnities given by the Vendors
in clause 9
"Specified Persons" Each of Brian Leckie, David Lenham, Allan
Thompson and Richard Thornton
"the Taxation Deed" The tax covenant contained in Part 2 of
Schedule 5
"the Taxation Warranties" Together, the English Taxation
Warranties and the Dutch Taxation
Warranties
"Tayrich Shares" All the issues shares in Tayrich Limited,
being one of the English Companies
"the Trade Names" The various names listed in Schedule 9
"Vehicle Leases" The vehicle leases in the agreed terms to be
entered into on Completion between Whitley
Transport Limited and various Group Members
relating to vehicles used by the Group Members
7<PAGE>
"the Vendor Group" Together, the First Vendor and each of its
subsidiary companies from time to time (as
defined in section 736 of the Act), other
than the English Group and the Dutch Group
"the Vendor Group Member" Any company which is a member of the
Vendor Group from time to time
"the Vendors" Together, the First Vendor and the Second
Vendor
"the Vendors' Solicitors" Eversheds of Cloth Hall Court,
Infirmary Street, Leeds, LS1 2JB (Ref:
C4.PHS) and Boekel de Neree of PO Box
2508, 1000 CM Amsterdam, Strawinskylaan
3037, Atrium 2nd Floor, 1077 2X
Amsterdam, Netherlands
"the Warranties" Together, the Dutch Warranties, the English
Warranties and the German Warranties
1.2 Any reference in this Agreement to any statutory provision shall
include reference to any subordinate legislation made pursuant
thereto and shall be deemed to be a reference to such statutory
provision or subordinate legislation as amended modified or re-
enacted before but not after the date hereof and any reference to
any provision of any such statutory provision or subordinate
legislation shall also include where appropriate any provision of
which it is a re-enactment (whether with or without
modification)made before the date hereof save that any reference
to Environmental Law shall be to Environmental Law as defined in
Part 1 or Part 2 of Schedule 4 (as the case may be);
1.3 references to persons will be construed so as to include bodies
corporate, unincorporated associations and partnerships;
1.4 references to a document being "in the agreed terms" will be
construed as references to that document in the form agreed and
initialled by or on behalf of the relevant Vendor and the
relevant Purchaser;
1.5 references to clauses and Schedules are to clauses of and
Schedules to this Agreement, and references to paragraphs are to
paragraphs in the Schedule in which such references appear;
1.6 the Schedules form part of this Agreement and will have the same
force and effect as if expressly set out in the body of this
Agreement;
1.7 the headings to the clauses of this Agreement and to the
paragraphs of the Schedules will not affect its construction;
8<PAGE>
1.8 references to the parties hereto include their respective
successors in title and permitted assigns; and
1.9 words importing the masculine gender only include the feminine
and neuter genders and words importing the singular only include
the plural and vice versa.
2. SALE AND PURCHASE
2.1 The First Vendor will sell with full title guarantee, and the
First Purchaser will buy, the English Shares subject to and on
the terms of this Agreement.
2.2 The Second Vendor will sell and the Second Purchaser will buy the
Dutch Shares, free from all Encumbrances subject to and on the
terms of this Agreement.
2.3 Each of the Shares will be sold and bought free from any
Encumbrance, and with all rights attached or accruing to it
including all rights to any dividends or other distributions
declared, made or paid after the date of Completion.
2.4 From the date of this Agreement up to but not including the date
of Completion, the Purchasers shall not be entitled to exercise
any rights attached or accruing to the Shares or the shares in
any Group Member (including, without limitation, any voting
rights attaching thereto and any right to receive dividends,
distributions or any return of capital declared, paid or made by
any Group Member before Completion).
2.5 Each of the Vendors waives all rights of pre-emption over any of
the Shares conferred by the articles of association of each Group
Member or otherwise.
2.6 The Purchasers will not be obliged to complete the purchase of
any of the Shares unless the purchase of all the Shares is
completed simultaneously.
3. CONSIDERATION
3.1 3.1.1 The consideration for the sale of the English
Shares will be the sum of (BT.PD.)18,500,000 (eighteen million five
hundred thousand pounds) (which shall be allocated as to
(BT.PD.)8,000,000 (eight million pounds) in respect of the Firth
Shares and (BT.PD.)10,500,000 (ten million five hundred thousand
pounds) in respect of the Tayrich Shares); and
3.1.2 the consideration for the sale of the Dutch Shares
shall be the sum of (BT.PD.)7,000,000 (seven million pounds) which
shall be paid to the Second Vendor or as it may direct.
3.2 3.2.1 Of the Consideration, the sum of (BT.PD.)8,500,000 (eight
million five hundred thousand pounds) in respect of the
English Shares (being (BT.PD.)5,500,000 in respect of the Firth
Shares and (BT.PD.)3,000,000 in respect of the Tayrich Shares) and
(BT.PD.)7,000,000 in respect of the Dutch Shares (together the
"Initial Consideration") will be paid in cash on Completion
by way of CHAPS transfer from a Clearing Bank to the client
account of the Vendors' English Solicitors with National
Westminster Bank Plc, Park Row, Leeds, sort code 60-60-05,
account number 00018988 or by such other method as may be
agreed between the parties. The Vendors' Solicitors are
authorised to receive the Initial Consideration on behalf of
the Vendors and payment to them will be a good and
sufficient discharge to the Purchasers and the Purchasers
will not be further concerned as to the application of the
moneys so paid.
9
<PAGE>
3.2.2 The Initial Consideration may be adjusted in accordance
with the provisions of Schedule 6.
3.3 The balance of the Consideration, comprising the sum of
(BT.PD.)10,000,000 in respect of the English Shares (being (BT.PD.)
2,500,000 in respect of the Firth Shares and (BT.PD.)7,500,000 in respect
of the Tayrich Shares) and the sum of (BT.PD.)NIL in respect of the Dutch
Shares but in each case subject to adjustment (if any) after
Completion as provided in clause 3.8 (together, the "Deferred
Consideration") will, subject to the other provisions of this
Agreement, be paid in cash on 15 December 1998 by way of CHAPS
transfer from a Clearing Bank to the client account of the
Vendors' Solicitors with National Westminster Bank Plc, Park Row,
Leeds, sort code 60-60-05, account number 00018988 or by such
other method as may be agreed between the parties. The Vendors'
Solicitors are authorised to receive the Deferred Consideration
on behalf of the Vendors and payment to them will be a good and
sufficient discharge to the Purchasers and the Purchasers will
not be further concerned as to the application of the moneys so
paid.
3.4 Payment of the Deferred Consideration will be secured by the
Confirmed Letter of Credit which shall be delivered by the
Purchasers on Completion. The First Purchaser shall use its
reasonable endeavours to procure that the Confirmed Letter of
Credit is in terms which embody the principles of the draft form
of guarantee attached.
3.5 Subject to clause 3.8.7 the Deferred Consideration shall carry
simple interest on the principal amount for the time being
outstanding at the Agreed Rate accruing on a daily basis from the
date of Completion until the date of actual payment. Interest
payments shall be made monthly on the last day of each month,
the first such payment to be made on 31 January 1998 in relation
to the period from Completion to 31 January 1998 and thereafter
on the last day of each month. If any payments due hereunder are
not made on the due date for payment, the Purchasers will be
liable to pay interest on any such overdue amount from the due
date for payment until the date of actual payment, whether before
or after any judgment at the annual rate of 3 per cent above the
base lending rate from time to time of Barclays Bank plc,
accruing on a daily basis.
3.6 Notwithstanding any other provisions of this Agreement, the
Deferred Consideration, together with all interest payable under
clause 3.5, shall become immediately due and payable forthwith
upon the occurrence of any of the following events:-
10<PAGE>
3.6.1 the relevant Purchaser becoming insolvent by
virtue of being deemed unable to pay its debts within the
meaning of section 123 of the Insolvency Act 1986 (or
pursuant to the corresponding provisions of any overseas
legislation applicable to the relevant Purchaser) or
becoming unable to pay its debts as they fall due; or
3.6.2 the relevant Purchaser convening a meeting of its
creditors or proposing or making any arrangement or
composition with, or any assignment for the benefit of, its
creditors, or a petition being presented or a meeting
convened for the purpose of considering a resolution, or
other steps are taken, for making an administration order
against or for the winding up of the relevant Purchaser; or
3.6.3 a receiver, or receiver and manager, or administrator
being appointed in respect of all, or any part, of the
assets or undertaking of the relevant Purchaser.
3.7 The relevant Purchaser shall notify the First Vendor in writing
forthwith upon the occurrence of any of the events set out in
clause 3.6.
3.8 3.8.1 If in the period of 12 months following
Completion, the First Purchaser sells or transfers the whole
of the business and assets of the division of Firth Carpets
Limited known as Network Flooring whether pursuant to one or
more transactions after giving effect to any closure of
parts of the business (a "Disposal") to a third party or
third parties not connected to either of the Purchasers (as
defined in Section 839 of the Income and Corporation Taxes
Act 1988) for an aggregate consideration received or
receivable ("Sale Consideration") of less than (BT.PD.)2,500,000
(two million five hundred thousand pounds) (before costs and
tax), then the amount of the Deferred Consideration shall
subject to clause 3.8.8 be reduced by an amount equal to 50%
(fifty per cent) of the shortfall (the "Shortfall") of the
Sale Consideration below (BT.PD.)2,500,000 and any such reduction
shall be deemed to reduce that part of the English Shares'
Consideration allocated to the Firth Shares. For the
avoidance of doubt a Disposal to a bonafide management buy-
out shall be a sale to a permissible purchaser pursuant to
this clause.
3.8.2 If any part of the Sale Consideration is paid or
payable otherwise than in cash, then such non-cash
consideration shall be valued by the parties at the date of
completion of the Disposal together with any other amount or
benefit received or receivable by the First Purchaser which,
having regard to the substance of the transaction as a
whole, can reasonably be regarded as an addition to the
price paid or payable for the said shares. The amount of
the Sale Consideration shall be notified by the First
Purchaser to the First Vendor by delivery of a certificate
from the First Purchaser's auditors for the time being,
certifying in writing that a Disposal has been completed and
the amount of the Sale Consideration.
3.8.3 The First Purchaser will consult with the First Vendor
on how to obtain the best price and other terms reasonably
available in achieving any Disposal and will provide such
information as the First Vendor may reasonably require in
relation to any Disposal subject, in each case, to neither
party thereby contravening any legal or regulatory requirement
and subject to appropriate commercial confidentiality.
11
<PAGE>
3.8.4 The First Purchaser shall use its reasonable endeavours
to obtain the best price available on a Disposal and shall
act and negotiate in good faith with a view to completing
such Disposal with a bona fide third party on arm's length
terms.
3.8.5 If there is a dispute as to whether the Deferred
Consideration should be reduced pursuant to the provisions
of this clause 3.8 (including the calculation of the
Shortfall) the dispute shall be urgently referred to the
Independent Accountant (as referred to in paragraphs 7 to 9
of Schedule 6) for final determination in accordance with
the procedural provisions of Schedule 6. For the avoidance
of doubt the First Purchaser shall be under no obligation to
delay the Disposal pending the determination of the dispute
in clause 3.8.5.
3.8.6 For the avoidance of doubt if the Sale Consideration is
(BT.PD.)2,500,000 (two million five hundred thousand pounds) or
more, then the Deferred Consideration shall not be reduced
pursuant to this clause 3.8.
3.8.7 If the Deferred Consideration is reduced pursuant to
this clause 3.8 then the interest payable on the Deferred
Consideration pursuant to clause 3.5 shall be recalculated
as follows:-
3.8.7.1 if the amount of interest paid in accordance with
clause 3.5 prior to the Disposal exceeds the amount of
interest at the Agreed Rate which would have been paid
or payable from Completion on the Deferred
Consideration as reduced pursuant to this clause 3.8
the amount of the Deferred Consideration shall be
further reduced by an amount equal to such excess; or
3.8.7.2 if clause 3.8.7.1 does not apply any further
payments of interest due in accordance with clause 3.5
shall (if necessary) be reduced (equally if more than
one payment remains outstanding) so that the aggregate
amount of interest paid on the Deferred Consideration
is equal to interest on the Deferred Consideration as
reduced pursuant to this clause at the Agreed Rate from
Completion to the due date for payment pursuant to this
Agreement.
3.8.8 Notwithstanding any other provision of this clause 3.8,
the Deferred Consideration shall not in any event be reduced
by an amount exceeding (BT.PD.)1,250,000 (one million two hundred
and fifty thousand pounds).
The parties shall comply with the obligations imposed on
them under the Confirmed Letter of Credit.
3.9 For the avoidance of doubt, the Purchasers shall have no right of
set off against the Deferred Consideration in respect of any
claim against the Vendors under the Warranties, the Taxation Deed
or any other provision of this Agreement or otherwise (save as
set out in clause 3.8).
12<PAGE>
4. WARRANTIES
4.1 The First Vendor represents and warrants to the First Purchaser
as at the date of this Agreement that the English Warranties
are true and accurate in all respects and not misleading,
provided however that the First Purchaser will not be entitled
to claim that any fact or combination of facts constitutes a
breach of any of the English Warranties if and to the extent that
such fact or combination of facts has been fairly disclosed in
the Original Disclosure Letter.
4.2 The First Vendor represents and warrants to the Second Purchaser
as at the date of this Agreement that the Dutch Warranties are
true and accurate in all respects and not misleading, provided
however that the Second Purchaser will not be entitled to claim
that any fact or combination of facts constitutes a breach of any
of the Dutch Warranties if and to the extent that such fact or
combination of facts has been fairly disclosed in the Original
Disclosure Letter.
4.3 The First Vendor represents and warrants to the Second Purchaser
as at the date of this Agreement that the German Warranties are
true and accurate in all respects and not misleading, provided
however that the Second Purchaser will not be entitled to claim
that any fact or combination of facts constitutes a breach of any
of the German Warranties if and to the extent that such fact or
combination of facts has been fairly disclosed in the Original
Disclosure Letter.
4.4 The Second Vendor represents and warrants to the Second Purchaser
as at the date of this Agreement that the Warranties set out in
paragraph 3 of Part 2 of Schedule 4 and paragraph 2 of Part 3 of
Schedule 4 are true and accurate in all respects and not
misleading provided however that the Second Purchaser will not
be entitled to claim that any fact or combination of facts
constitutes a breach of any of the provisions of paragraph 2 of
Part 2 of Schedule 4 or paragraph 2 of Part 3 of Schedule 4 if
and to the extent that such fact or combination of facts has been
fairly disclosed in the Original Disclosure Letter.
4.5 The First Vendor represents and warrants to the First Purchaser
that as at the date of Completion the English Warranties will be
true and accurate in all respects and not misleading, provided
however that the First Purchaser will not (save as provided in
clause 4.22) be entitled to claim that any fact or combination of
facts constitutes a breach of any of the English Warranties given
at Completion if and to the extent that such fact or combination
of facts has been fairly disclosed in the Final Disclosure
Letter.
4.6 The First Vendor represents and warrants to the Second Purchaser
that as at the date of Completion the Dutch Warranties will be
true and accurate in all respects and not misleading, provided
however that the Second Purchaser will not (save as provided in
clause 4.22) be entitled to claim that any fact or combination
of facts constitutes a breach of any of the Dutch Warranties
given at Completion if and to the extent that such fact or
combination of facts has been fairly disclosed in the Final
Disclosure Letter.
13<PAGE>
4.7 The First Vendor represents and warrants to the Second Purchaser
that as at the date of Completion the German Warranties will be
true and accurate in all respects and not misleading, provided
however that the Second Purchaser will not (save as provided in
clause 4.22) be entitled to claim that any fact or combination
of facts constitutes a breach of any of the German Warranties
given at Completion if and to the extent that such fact or
combination of facts has been fairly disclosed in the Final
Disclosure Letter.
4.8 The Second Vendor represents and warrants to the Second Purchaser
that as at the date of Completion the Warranties set out in
paragraph 3 of Part 2 of Schedule 4 and paragraph 2 of Part 3 of
Schedule 4 will be true and accurate in all respects and not
misleading, provided however that the Second Purchaser will not
(save as provided in clause 4.22) be entitled to claim that any
fact or combination of facts constitutes a breach of any of the
provisions of paragraph 2 of Part 3 of Schedule 4 and paragraph 2
of Part 3 of Schedule 4 if and to the extent that such fact or
combination of facts has been fairly disclosed in the Final
Disclosure Letter.
4.9 For the avoidance of doubt, any new facts or matters which occur
after the date hereof disclosed pursuant to the Final Disclosure
Letter shall not be deemed to qualify the Warranties given as at
the date of this Agreement.
4.10 In this Agreement, unless otherwise specified, where any Warranty
refers to the knowledge, information, belief or awareness of
either of the Vendors (or similar expression), such reference
shall take effect so as to be limited to the actual knowledge,
information, belief or awareness of the Specified Persons at the
relevant time having made appropriate enquiry only of the
Divisional Directors and, to the extent only specified in
Schedule 4 having made appropriate enquiry of the named advisers
to the Vendors in respect of specific Warranties and shall not
imply (or be deemed to imply) that the relevant Vendor has made
enquiries of any other party.
4.11 Each of the Warranties shall be construed as a separate and
independent warranty and (save where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from any other Warranty.
4.12 Subject to clauses 4.20, 4.21, 4.22 and 12.7.4 the rights and
remedies of the Purchasers under this Agreement in respect of any
breach of any of the Warranties shall continue to subsist
notwithstanding Completion.
4.13 Each of the Vendors hereby agrees with the Purchasers to waive
any right which it may have in respect of any misrepresentation
inaccuracy or omission in or from any information or advice
supplied or given by officers or employees of Group Members (for
so long as they remain employed by any Group Member following
Completion) in enabling the Vendors to give the Warranties or to
prepare the Original Disclosure Letter or the Final Disclosure
Letter save in the event of fraud or wilful non-disclosure by any
of the officers or employees of Group Members when the Vendors'
rights are preserved.
14<PAGE>
4.14 Pending Completion the First Vendor will procure that each Group
Member complies with the provisions of clause 6.3.
4.15 Notwithstanding any other provisions of this Agreement the
liability of the Vendors shall be limited in accordance with the
provisions of Schedule 7.
4.16 Any payment made by the Vendors or either of them in respect of a
breach of the Warranties or under Part 2 of Schedule 5 or
pursuant to clauses 3.2.3 or clauses 6.11 to 6.13 and clause 6.15
shall be deemed (as between the relevant Purchaser and the Vendor
making such payment) to be a reduction in the Consideration.
4.17 Each of the Purchasers warrant to each of the Vendors that:-
4.17.1 each has all requisite corporate power to enter into and
perform this Agreement and the transaction and matters
contemplated hereby and has taken all necessary action to
authorise the entry into and performance of this Agreement
and the transactions and matters contemplated hereby;
4.17.2 each of the obligations expressed to be assumed by each of
the Purchasers under this Agreement and any agreement hereby
contemplated constitutes a valid and binding obligation on
the relevant Purchaser;
4.17.3 the execution and performance of this Agreement by each of
the Purchasers is not prohibited or restricted by any
provision of law or any other matter of thing and in
particular but without limitation is not subject to the
approval or consent of any governmental authority or
regulatory body or otherwise or the approval of the
shareholders of either of the Purchasers; and
4.17.4 all statements of fact contained in the Circular concerning
the Purchasers and/or Interface Inc, the parent company of
each of the Purchasers, are true and accurate in all
material respects and not misleading and do not omit
anything likely to affect the import of such information.
4.18 For the purpose of currency conversion, where relevant and save
as set out in Schedule 6 in relation to the Completion Accounts,
such should be calculated as at the date of settlement of any
claim under this Agreement either through deed of settlement or
final judgment of the court based on the middle rate of exchange
of the British pound sterling as published in the morning edition
of the London Financial Times.
4.19 The provisions of Schedule 5 (Taxation) shall apply with respect
to the matters contained or referred to therein.
4.20 The Vendors shall disclose to the Purchasers in writing any new
matter or thing which has arisen after the date of this Agreement
and prior to Completion (a "New Matter") and which becomes known
to them after the date of this Agreement which, if not disclosed,
would constitute a breach of any of the Warranties when repeated
at Completion. Such disclosure shall be made, insofar as
practicable, within 3 Business Days before the date of Completion
in respect of such New Matters which are then known to the
Vendors and shall be incorporated in the Final Disclosure Letter
handed over at Completion.
15<PAGE>
4.21.1 If at any time between the date of this Agreement and the
date of Completion the Vendors disclose to the Purchasers
pursuant to clause 4.20 or the Purchasers otherwise become
aware of any New Matter (other than through disclosure by
the Vendors) which but for the notification by the Vendors
pursuant to clause 4.20 would constitute a breach of the
Warranties as repeated on Completion and which has a Material
Adverse Effect which is not remedied by the Vendors prior to
Completion at no cost to the Purchasers or the Group Members,
then any of the parties shall have the right by notice in writing
to the other to rescind this Agreement, which in the event of
exercise of such right by the Purchasers or the Vendors
shall be their exclusive remedy and shall extinguish any
claim by the Purchasers or the Vendors for damages (whether
arising in contract, tort or otherwise) in connection with
this Agreement;
4.21.2 For the purposes of this clause 4.21 Material Adverse Effect
shall mean a diminution in the aggregate value of the Shares
taken as a whole of (BT.PD.)3,000,000 (three million pounds) or
more. For the purposes of this clause 4.21 and clauses
4.22 and 4.23 the aggregate value of the Shares taken as a
whole shall be (BT.PD.)30 million (thirty million pounds).
4.21.3 For the avoidance of doubt, if a right of rescission exists
pursuant to clause 4.21.1 and nonetheless Completion takes
place, the Purchasers shall not be entitled to bring any
claim in respect of any New Matter fairly disclosed in the
Final Disclosure Letter or which was actually known to the
Purchasers other than through disclosure by the Vendors
between the date of this Agreement and Completion.
4.22 4.22.1 If at any time between the date of this Agreement and
the date of Completion the Vendors disclose to the
Purchasers any New Matter pursuant to clause 4.20 or the
Purchasers otherwise become aware of any New Matter (other
than through disclosure by the Vendors) which but for the
notification by the Vendors pursuant to clause 4.20 would
constitute a breach of the Warranties as repeated on
Completion and which has an Adverse Effect which is not
remedied by the Vendors prior to Completion at no cost to
the Purchasers or the Group Members, then the Purchasers
shall, notwithstanding the disclosure by the Vendors, be
entitled following Completion to bring a claim for breach of
the Warranties in respect of such matter or thing, subject
always to the terms of this Agreement (including, so far as
applicable, the terms of Schedule 7).
16<PAGE>
4.22.2 For the purposes of this clause 4.22 Adverse Effect shall
mean a diminution in the aggregate value of the Shares taken
as a whole of more than (BT.PD.)1,250,000 (one million two hundred
and fifty thousand pounds) but less than (BT.PD.)3,000,000 (three
million pounds).
4.22.3 For the avoidance of doubt, if clause 4.22 applies then
neither party shall be entitled to rescind this Agreement.
4.22.4 If at any time between the date of this Agreement and the
date of Completion the Vendors disclose to the Purchasers
pursuant to clause 4.20 or the Purchasers otherwise become
aware of any New Matter (other than through disclosure by
the Vendors) which but for the notification by the Vendors
pursuant to clause 4.20 would constitute a breach of the
Warranties as repeated on Completion and which would result
in a diminution in the aggregate value of the Shares taken
as a whole of (BT.PD.)1,250,000 (one million two hundred and fifty
thousand pounds) or less, then neither party shall be
entitled to rescind this Agreement and the Purchasers shall
not be entitled either before or after Completion to bring
any claim in respect of such New Matter.
5. RESTRICTIVE COVENANTS
5.1 For the purpose of assuring to the Purchasers the full benefit of
each Group Member and in consideration for the Purchasers
agreeing to buy the Shares on the terms of this Agreement, the
First Vendor undertakes to the Purchasers that it will not, and
the First Vendor undertakes to the Purchasers that it will
procure that each Vendor Group Member (other than Bloomsburg
Carpet Industries Inc) ("Bloomsburg") not, either on their own
behalf or jointly with or as manager, adviser, consultant or
agent for any other person, directly or indirectly, without the
express prior written consent of either of the Purchasers:-
5.1.1 for a period of five years immediately following
Completion, interfere, or seek to interfere, with the
continuance of supplies to any Group Member from any
supplier who has been supplying goods and/or services to
that Group Member at any time during the twelve months
immediately preceding the date of Completion if such
interference might or would cause that supplier to cease
supplying, or materially reduce its supply of, those goods
and/or services or change materially the terms of supply in
relation to those goods and services other than in the
ordinary course of business;
5.1.2 for a period of five years immediately following
Completion, solicit or entice, or endeavour to solicit or
entice, away from any Group Member any agent or distributor
of a Group Member or any person employed in a managerial,
supervisory, technical or sales capacity by, or who is or
was a consultant to, any Group Member at Completion;
5.1.3 for a period of five years immediately following
Completion be engaged in a Prohibited Business in the Prohibited
Area;
17<PAGE>
5.1.4 for a period of five years from the date of Completion
approach, canvas, solicit, or otherwise act with a view to
enticing away from or seeking in competition with any
Prohibited Business carried on by a Group Member the custom
of any person who at any time during the period of 12 months
preceding the date of Completion has been a customer of any
Group Member or interfere or seek to interfere with the
continuance of supplies by any Group Member to any person
who at any time during the period of 12 months preceding the
date of Completion has been a customer of any Group Member
if such interference might or would cause that person to
cease purchasing from, or materially reduce its purchases
from, any Group Member or materially change the commercial
terms on which it purchases from any Group Member other than
in the ordinary course of business;
5.1.5 at any time after Completion use or procure or cause or
so far as it is able permit the use of any name or names
identical or similar to or including the Trade Names or any
colourable imitation thereof in connection with any activity
whatsoever;
5.1.6 at any time after Completion (save as required by law)
disclose or divulge to any person other than to officers or
employees of the Purchasers whose province it is to know the
same or use other than for the benefit of the Purchasers,
any Confidential Information which may be within or have
come to its knowledge;
5.1.7 at any time after Completion do or say anything which
would or is deliberately intended to damage the goodwill,
business or reputation of any Group Member.
5.2 The First Vendor undertakes to the Purchasers that, for so long
as Bloomsburg remains a Vendor Group Member, it shall procure
that Bloomsburg shall not for a period of five years from the
date of Completion manufacture the Prohibited Products in the
Prohibited Area or increase its current annual sales of the
Prohibited Products into the Prohibited Area beyond its annual
turnover in respect of the same at the date of this Agreement,
being approximately US$80,000 per annum. Upon request the First
Vendor shall, for so long as Bloomsburg remains a Vendor Group
Member, provide to the Purchasers details of such annual sales.
5.3 For the avoidance of doubt, nothing in clauses 5.1 or 5.2 shall
operate to prohibit any Vendor Group Member:-
5.3.1 from the provision strictly in its capacity as a raw
component supplier of technical, commercial or professional
advice to persons engaged in a Prohibited Business anywhere
in the world whether by way of joint venture or otherwise;
or
5.3.2 from holding or being beneficially interested in up to
3% (three percent) of the securities of any company which is
engaged in a Prohibited Business (which business shall be a
"Relevant Business") and the shares of which are listed or
dealt in on any recognised stock exchange as defined in the
Financial Services Act 1986 (including the Alternative
Investment Market); or
18<PAGE>
5.3.3 from acquiring or becoming interested in (whether by
means of share purchase, asset purchase, merger or
otherwise) a Relevant Business as part of an acquisition of
or merger with a larger enterprise (the "Larger Enterprise")
provided that:-
5.3.3.1 the relevant acquisition or merger is not made
solely or primarily with a view to acquiring the
Relevant Business;
5.3.3.2 the turnover derived from the Relevant Business is
not (by reference to the latest available audited
accounts relating to it) more than 10% (ten per cent)
of the aggregate consolidated turnover of the Larger
Enterprise (including its subsidiaries and associated
companies insofar as such subsidiary and associated
companies are comprised in the acquisition or merger);
and
5.3.3.3 the Relevant Business shall be offered for sale at
market value on usual contractual terms ("Specified
Price") to the Purchasers within three months of its
acquisition by the Vendor Group. If the Purchasers do
not accept that offer within 30 Business Days of it
being made, then the Vendor Group shall be entitled to
retain the Relevant Business or to sell it to any
party. Any dispute as to the Specified Price shall be
agreed between the parties, failing which it shall be
urgently referred to the independent accountant for
resolution (as referred to in paragraph 7 of Schedule 6
for final determination pursuant to the procedural
provisions of Schedule 6)
5.4 Following and with effect from the completion of the sale by the
Vendor Group of the whole of the issued share capital or the
whole of the business and assets of Bloomsburg to a third party
unconnected to the Vendor Group (as defined in section 839 of the
Income and Corporation Taxes Act 1988), the covenant (given
pursuant to clause 5.2 will terminate and cease to have any
effect and the covenants given pursuant to clause 5.1.3 will be
extended and accepted by the First Vendor and each Vendor Group
Member (other than Bloomsburg) in relation to the engagement of
any Prohibited Business in the Prohibited Area and North America
(e.g. United States of America and Canada), subject always to the
provisions of clause 5.3 Such covenants shall in any event expire
on the fifth anniversary of Completion of this Agreement.
5.5 The parties agree that each of the undertakings set out in this
clause 5 is separate and severable.
5.6 No restriction contained in this Agreement, or in any agreement
or arrangement of which this Agreement forms part, which causes
this Agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices Act 1976 will
take effect until the day after particulars of this Agreement or
of that agreement or arrangement, as the case may be, have been
furnished to the Director General of Fair Trading pursuant to
that Act.
19<PAGE>
6. CONDITIONS AND COMPLETION
6.1 The sale and purchase of the Shares is conditional upon:-
6.1.1. the passing at a general meeting of the First Vendor of
all resolutions necessary to implement the terms of and to
approve the entering into of this Agreement;
6.1.2. the provision by the Purchasers of the Confirmed Letter
of Credit; and
6.1.3. the execution on Completion of the SB Supply Agreement.
6.2 The sole obligation of the First Vendor in relation to clause 6.1
shall be to despatch a circular to its shareholders containing a
recommendation to vote in favour of the appropriate resolution.
In the event that the conditions in clause 6.1 have not been
fulfilled by 31 December 1997 or by such later date as may be
agreed in writing between the Vendors and the Purchasers, this
Agreement shall, save for this clause 6.2 and clause 7,
thereupon become null and void and none of the parties shall have
any rights against any other party under this Agreement except
for breach of this clause 6.2 and clause 7.
6.3 The Vendors shall procure that between the time of the execution
of this Agreement and Completion each Group Member shall carry on
its Business in the ordinary and usual course and without
limiting the foregoing no Group Member (nor any of their officers
or employees) will do any of the following acts without the prior
written consent of either of the Purchasers:-
6.3.1 incurring any expenditure other than for expenditure
not exceeding (BT.PD.)50,000 which is within current budgets and
other than for the purchase of a Colourtec machine at a
total cost of US$900,000 on capital account or entering into
any commitment to do so other than such amounts as have been
agreed in writing prior to the date this Agreement with
either of the Purchasers;
6.3.2 disposing of any part of its assets having a value in
excess of (BT.PD.)50,000 except Stock (as defined in paragraph 1 of
Part 1 of Schedule 4) in the ordinary course of trading;
6.3.3 borrowing any money except under its existing overdraft
facilities from its bankers or making any payments out of or
drawings on its bank account other than routine payments;
6.3.4 entering into any guarantee or indemnity;
6.3.5 entering into any unusual or abnormal Contract or a
Contract which cannot be terminated on twelve months' notice
or less (as defined in paragraph 1 of Part 1 of Schedule 4)
or commitment out of the ordinary course of business;
20<PAGE>
6.3.6 granting any lease or third party right in respect of
the Property or assigning or otherwise disposing of the same
(or any part thereof);
6.3.7 making any loan or grant any credit outside the
ordinary course of business;
6.3.8 entering into any leasing, hire purchase or other
agreement or arrangement for payment on deferred terms out
of the ordinary course of business;
6.3.9 declaring, making or paying any dividend or other
distribution;
6.3.10 granting any security over any of its assets other than
a lien arising by operation of law;
6.3.11 appointing any additional director;
6.3.12 employing any new employees (other than a new employee
(not being a Senior Employee) employed to replace any
employee whose employment terminates after the date hereof
or terminating the employment of any Senior Employees or
making any material change in the terms or conditions of
employment (including increases in salary, bonuses,
commissions, profits in kind or pensions contributions) or
pension benefits of any employees. (The expression "Senior
Employee" shall mean any employee of an English Group Member
whose remuneration is in excess of (BT.PD.)35,000 per annum or in
the case of a Dutch Group Member is in excess of 100,000
Guilders per annum);
6.3.13 permitting any insurance to lapse or doing anything
which the Vendors are aware would make any policy or
insurance void or voidable;
6.3.14 creating or issuing any class of share or loan capital;
6.3.15 enter into as plaintiff any litigation or arbitration
proceedings (other than routine debt collection);
6.3.16 change its accounting reference date;
6.3.17 pass any resolution of its shareholders;
6.3.18 change or amend revaluations, depreciation periods or
changes in accounting policies;
6.3.19 have any contact with the Works Council (other than for
routine or other contact required by law).
21<PAGE>
6.4 The sale and purchase of the English Shares will, subject to the
satisfaction of the condition set out in clause 6.1, be completed
at the offices of the Vendors' Solicitors in Leeds by 17.00 p.m.
on 30 December 1997 when:-
6.4.1 the First Vendor will produce and deliver to the First
Purchaser:-
6.4.1.1 duly executed transfers of the English
Shares in favour of the First Purchaser (or as it
will direct) together with all relevant share
certificates (or in the case of any lost
certificate an indemnity in relation to it) and
together also with such waivers and consents as
the First Purchaser may reasonably require to
enable the First Purchaser and its nominee(s) to
be registered as the holders of the Shares;
6.4.1.2 transfers of all shares in any English
Group Member not held in the name of either of the
English Companies or another English Group Member
duly executed in favour of the First Purchaser (or
as it will direct) together with share
certificates in respect of all the issued shares
of each English Group Member other than the
English Companies (or in the case of any lost
certificate an indemnity in relation to it);
6.4.1.3 written resignations in the agreed
terms of such directors and the secretary of each
English Group Member as are notified by the First
Purchaser to the First Vendor prior to Completion;
6.4.1.4 the written resignation of Price
Waterhouse as auditors of each English Group
Member accompanied by the statement referred to in
section 392 of the Act;
6.4.1.5 the memorandum and articles of
association, the certificate of incorporation, any
certificate(s) of incorporation on change of name,
the common seal and the statutory books and
registers of each English Group Member;
6.4.1.6 all deeds and documents relating to the
title of any English Group Member to the English
Property (save in relation to the properties
referred to at paragraph 1.1.1 to 1.1.5 of Part 1
of Schedule 3);
6.4.1.7 all cheque books in current use of each
English Group Member;
6.4.1.8 all bank mandates given by each English
Group Member and all bank statements in respect of
each account of each English Group Member as at
the close of business on the second last Business
Day prior to Completion, together in each case
with a reconciliation statement prepared by the
First Vendor to show the position at Completion
22<PAGE>
(listing unpresented cheques drawn or received by
the relevant English Group Member and standing
orders payable since the date of such bank
statements);
6.4.1.9 all licences, certificates or other
documents previously agreed by the First Vendor
and the First Purchaser;
6.4.1.10 all papers, books, records, keys, credit cards and
other property (if any) of each English Group
Member which are in the possession or under the
control of the First Vendor or any other person
who resigns as an officer of any English Group
Member in accordance with this clause 6; and
6.4.1.11 the Final Disclosure Letter duly executed on
behalf of the First Vendor;
6.4.1.12 all motor vehicles owned by each English Group
Member but in the possession of any person
resigning from his office or employment on
Completion together with the keys registration
documents and certificates of insurance in respect
thereof;
6.4.1.13 such waivers consents or other documents as may be
necessary to enable the full beneficial ownership
of the English Shares to vest in the First
Purchaser;
6.4.1.14 duly executed deeds of release in the agreed form
releasing each English Group Member from any
liability whatsoever (actual or contingent) which
may be owing to any Vendor Group Member;
6.4.1.15 duly executed deeds of release or appropriate
undertaking from the relevant banks in the agreed
form releasing each English Group Member from all
guarantees and charges of each English Group
Member to Barclays Bank plc;
6.4.1.16 the Vehicles Leases duly executed by Whitley
Transport Limited, a subsidiary of the First
Vendor and various Group Members; and
6.4.1.17 duly executed deeds of release in the agreed terms
of any guarantee, charge or other security granted
by any English Group Member to any Vendor Group
Member.
6.4.2 the First Vendor will:-
6.4.2.1 repay, and will procure that any
company of which the First Vendor has control (as
defined in section 840 Income and Corporation
Taxes Act 1988) will repay, all amounts owed
(other than on trading account save where the
amounts are outstanding by more than 60 days) by
it to any English Group Member, whether due for
payment or not;
23<PAGE>
6.4.2.2 will procure that each English Group
Member will repay all amounts owed to Barclays
Bank PLC and any other bank or financial
institution (but for the avoidance of doubt
excluding any hire purchase, finance lease or
other similar agreement);
6.4.2.3 procure that duly convened
meetings are held at which:-
6.4.2.3.1 the transfers referred to in clause 6.4.1
(subject to stamping if not previously
effected) are approved for registration in
the books of the relevant English Group
Members; and
6.4.2.3.2 persons nominated by the First Purchaser are
appointed as additional or replacement
directors of specified English Group Members
(subject to any maximum number of directors
imposed by the relevant articles of
association), and any person nominated by the
English Purchaser is appointed as secretary
of specified English Group Member; and
6.4.2.4 subject to the court order referred to
in clause 11.3 being obtained, enter into the
Lease and procure that Firth Carpets Limited
enters into the Lease; and
6.4.2.5 procure that Stonehouse Battye Limited enters into
the SB Supply agreement.
6.5 6.5.1 The sale and purchase of the Dutch Shares will,
subject to the satisfaction of the condition set out in
clause 6.1, be completed at the offices of the Vendors'
Solicitors in the Netherlands contemporaneously with the
sale and purchase of the English Shares in Leeds. At
Completion, the Second Vendor and the Second Purchaser shall
execute before a notary attached to the Vendors' Solicitors
in the Netherlands a deed of transfer in the agreed terms
in respect of the Dutch Shares in favour of the Second
Purchaser (or as it will direct). The Second Vendor shall
give such assistance to the Second Purchaser as the Second
Purchaser shall reasonably require to enable the Dutch
Shares to be effectively transferred to and registered in
the name of the Second Purchaser (or as it will direct).
6.5.2 At Completion the Second Vendor will produce and
deliver to the Second Purchaser or the Second Purchaser's
Dutch legal adviser, the following:-
6.5.2.1 letters of resignation in the agreed
terms for such of the current managing directors
("bestuurders") of the Dutch Group as shall be
notified by the First Purchaser to the First
Vendor together with a written acknowledgement
from each of them in the agreed terms;
24<PAGE>
6.5.2.2 the latest text of the Articles of
Association ("Statuten") and Deeds of Amendment of
Statuten of the Dutch Group and original
Shareholders' Registers (duly written up) and any
existing minute books and other statutory books of
the Dutch Group;
6.5.2.3 original Leases of the Dutch Property;
6.5.2.4 all deed and documents relating to the
title ("eigendom") or interest of the Dutch Group
in the Dutch Property;
6.5.2.5 all bank mandates given by Vebe
Floorcoverings BV and Vebe Floorcoverings GmbH and
the appropriate forms to amend the mandates given
by such companies to their bankers together with
copies of the last statement (being dated not
earlier than the second Business Day prior to
Completion) issued by each of the banks of such
companies in respect of the most recent balances
on the various bank accounts of such companies
together with related reconciliation statements
reconciling the bank statements to the accounts
records of such companies at the same date;
6.5.2.6 the written resignation of Price
Waterhouse Nederland, as auditors of each Dutch
Group Member;
6.5.2.7 all licences, certificates or other
documents specified by the Second Purchaser before
the date of this Agreement;
6.5.2.8 all papers, books, records, keys,
credit card, company cars(s) and other property
(if any) of the Dutch Group which are in the
possession or under the control of the Second
Vendor or any other person who resigns as a
director in accordance with this clause 6.5;
6.5.2.9 the Second Vendor shall repay or
procure the repayment of all monies then owing by
it or by any other Vendor Group Member to any
Dutch Group Member (other than on trading account
save where the amounts are outstanding for more
than 60 days) whether due for repayment or not;
6.5.2.10 duly executed deeds of release in the agreed terms
of any guarantee, charge or other security granted
by any Dutch Group Member to any; Vendor Group
Member;
25<PAGE>
6.5.2.11 the Final Disclosure Letter duly executed on
behalf of the Second Vendor; and
6.5.2.12 all motor vehicles owned by each Dutch Group
Member but in the possession of any person
resigning from his office or employment on
Completion together with the keys registration
documents and certificates of insurance in respect
thereof;
6.5.2.13 duly executed deeds of release in the agreed form
releasing each Dutch Group Member from any
liability whatsoever (actual or contingent) which
may be owing to any Vendor Group Member;
6.6 Upon Completion the First Purchaser will:-
6.6.1 pay the Initial Consideration relating to the English
Shares;
6.6.2 at or as soon as practicable after Completion procure
the release of the First Vendor or any other Vendor Group
Member from any guarantee, charge or other security given
in respect of the liabilities of any English Group Member or
Dutch Group Member (including those specifically identified
in the Disclosure Letter) and will in the meantime indemnify
each Vendor Group Member and keep it indemnified against any
liability (including costs, damages and expenses) which it
may suffer under or in relation to such guarantees, charges
or securities;
6.6.3 deliver to the First Vendor the SB Supply Agreement
duly executed by Firth Carpets Limited;
6.6.4 procure the granting of the Confirmed Letter of Credit
by Sun Trust Bank and confirmed by Barclays Bank PLC; and
6.6.5 deliver to the First Vendor the Lease duly executed by
Firth Carpets Limited;
6.7 Upon Completion, the Second Purchaser will:
6.7.1 pay the Initial Consideration relating to the Dutch
Shares;
6.7.2 advance to Vebe Floorcoverings B.V. by way of loan an
amount equal to the Dutch Indebtedness and procure upon
Completion the repayment of the Dutch Indebtedness by Vebe
Floorcoverings B.V. to Rabobank.
6.7.3 at or as soon as practicable after Completion
procure the release of the Second Vendor or any other Vendor Group
Member from any guarantees, charges or security given in respect
of the liabilities of any Dutch Group Member or English Group
Member (including those specifically identified in the
Disclosure Letter) for the purpose of this provision and will in
the meantime indemnify each Vendor Group Member and keep it
indemnified against any liabilities (including costs, damages
and expenses) which it may suffer under or in relation to such
guarantees, charges or securities.
26<PAGE>
6.8 Completion of the sale and purchase of the English Shares and the
Dutch Shares pursuant to this clause 6 shall take place
simultaneously.
6.9 The Purchasers shall not be obliged to complete the purchase of
the Shares hereunder unless the Vendors comply fully with their
obligations under clause 6 and unless the purchase of all the
Shares is completed simultaneously (but so that completion of the
purchase of some of the Shares will not affect the rights of the
Purchasers with respect to the others).
6.10 The Vendors shall not be obliged to complete the sale of the
Shares hereunder unless the Purchasers shall comply fully with
their obligations under clause 6.6 and 6.7 (but excluding for
this purpose clauses 6.6.2 and 6.7.3) and unless the sale of all
the Shares is completed simultaneously (but so that completion of
the sale of some of the Shares will not affect the rights of the
Vendors with respect to the others).
6.11 In calculating the Dutch Shares' Consideration for this Agreement
the parties have assumed that the Dutch Indebtedness is
(BT.PD.)4,500,000 (the "Assumed Indebtedness"). If the actual Dutch
Indebtedness at Completion as shown by the Completion Accounts is
greater than the Assumed Indebtedness then the Vendors shall
repay to the Purchasers one pound for each pound of such excess.
If the actual Dutch Indebtedness at Completion is less than the
Assumed Indebtedness then the Purchasers shall pay to the Vendors
one pound for each pound of such shortfall.
6.12
6.12.1 If the First Vendor fails on or before Completion to
comply fully with its obligations pursuant to clauses
6.4.2.1 and/or 6.4.2.2 in respect of any Group Member then
it shall pay to the Purchasers or to the relevant Group
Member (as the case may be) within 5 Business Days of the
Completion Accounts being agreed or determined, the amount
of any outstanding indebtedness at Completion of the type
referred to in clauses 6.4.2.1 and 6.4.2.2 as such amounts
are shown in the Completion Accounts.
6.12.2 If the First Vendor, in discharging its obligations under
clauses 6.4.2.1 and/or 6.4.2.2, discharges more monies than
are required to repay all indebtedness of the type referred
to in those clauses, then the Purchasers shall pay to the
Vendors within 5 Business Days of the Completion Accounts
being agreed or determined the amount of such excess
payments as such amounts are shown in the Completion
Accounts.
6.13 To the extent that the Completion Accounts as finally agreed or
determined in accordance with the provisions of Schedule 6 show
that the balance of cash in hand or at a bank of any Group Member
is greater than zero, then the Purchasers shall within 5 Business
Days of the Completion Accounts being so agreed or determined pay
to the Vendors as additional consideration for the Shares an
amount equal to such positive cash balances.
27<PAGE>
6.14 During the period between the date of this Agreement and
Completion and, if relevant, following Completion, the parties
shall co-operate with each other to obtain the assignment of all
Vehicle Leases (or similar agreements) entered into by Whitley
Transport Limited in respect of vehicles used by Group Members to
the relevant Group Members or to the Purchasers and until such
assignment the Group Members will have use of the relevant
vehicles including those owned by Whitley Transport Limited.
6.15 To the extent that any English Group Member or Dutch Group Member
owes any amount to any Vendor Group Member at Completion (other
than on trading account save where amounts are outstanding for
more than 60 days) the Purchasers shall following Completion
repay or procure the repayment by the relevant Group Member of
all such sums to the relevant Vendor Group Member.
7. ANNOUNCEMENTS
7.1 No announcement concerning the transactions contemplated by this
Agreement or any matter ancillary to it and no disclosure of the
terms of this Agreement will (save as required by English or
Dutch law or regulations or the regulations of the London Stock
Exchange or the NASDAQ/SEC requirements) (in which event,
reasonable attempts will be made to consult with the other
parties before such announcement) be made by either of the
Vendors except with the prior written approval of either of the
Purchasers or by either of the Purchasers except with the prior
written approval of either of the Vendors.
7.2 Within 5 days of the date of this Agreement the First Vendor will
send a letter in the agreed terms to each of the Divisional
Directors relating to their dealings with third parties in the
period between the date of this Agreement and Completion.
8. COSTS
Each party to this Agreement will bear such party's own costs
and expenses relating to the preparation and completion of this
Agreement, except where otherwise expressly stated.
9. NOTICES
9.1 Any demand, notice or other communication given or made under or
in connection with this Agreement will be in writing.
9.2 Any such demand, notice or other communication will, if otherwise
given or made in accordance with this clause 9, be deemed to have
been duly given or made as follows:-
9.2.1 if sent by prepaid first class post, on the second
Business Day after the date of posting; or
28<PAGE>
9.2.2 if delivered by hand, upon delivery at the address
provided for in this clause 9; or
9.2.3 if sent by facsimile, on the day of transmission
provided that a confirmatory copy is, on the same Business
Day that the facsimile is transmitted, sent by pre-paid
first class post in the manner provided for in this clause
9,
provided however that, if it is delivered by hand or sent by
facsimile on a day which is not a Business Day or after 4 p.m. on
a Business Day, it will instead be deemed to have been given or
made on the next Business Day.
9.3 Any such demand, notice or other communication will, in the case
of service by post or delivery by hand, be addressed (subject as
provided in this clause 9) to the recipient at the recipient's
address stated in this Agreement or at such other address as may
from time to time be notified in writing by the recipient to the
sender as being the recipient's address for service, provided
that:-
9.3.1 in the case of a company it may instead (at the option
of the sender) be addressed to its registered office for the
time being;
9.3.2 if given or made to any one of the Vendors or to the
Vendors' English Solicitors, or to the Purchasers or to the
Purchasers' English Solicitors, it will be treated as
validly given or made to both of the Vendors or both of the
Purchasers as the case may be;
9.3.3 any demand, notice or communication sent to the
Purchasers shall also be copied to Ray Willoch at Interface
Inc. on facsimile number 001 770 319 6270.
9.4 Any such demand, notice or other communication will, in the case
of service by facsimile, be sent to the recipient or to any
person service on whom (in accordance with the foregoing
provisions of this clause 9) is deemed to be service on the
recipient, using a facsimile number then used by the recipient or
(as the case may be) such other person at an address which (in
accordance with such provisions) could have been used for service
by post.
9.5 The provisions of this clause 9 will not apply, in the case of
service of process relating to any proceeding, suit or action, to
the extent that such provisions are inconsistent with the Rules
of the Supreme Court 1965.
10. Pensions and Property
10.1 The provisions of Schedule 8 shall apply with respect to the
matters contained or referred to therein.
10.2 The First Vendor shall and shall procure that Firth Carpets
Limited shall use all reasonable endeavours to obtain a court
order pursuant to Section 38(4) of the Landlord and Tenant Act
1954 (as amended by Section 5 of the Law of Property Act 1969)
authorising the exclusion of the provisions of Sections 24-28
inclusive of the Landlord and Tenant Act 1954 in relation to the
Lease as soon as reasonably practicable after the date of this
Agreement.
29<PAGE>
10.3 In respect of the boiler house at the property North of Birkby
Lane (numbered 1.1.1 in Part 1 of Schedule 3), if the First
Purchaser carries out works to remove asbestos from such boiler
house then the First Vendor shall within 10 Business Days of
demand from the First Purchaser (accompanied by appropriate
evidence of expenditure) make a contribution to such removal
costs up to a maximum of (BT.PD.)25,000.
10.4 The First Vendor shall indemnify the Purchasers fully to the
extent that any English Group Member suffers or incurs any
liability arising directly or indirectly from:-
(a) the lack of landlord's consent to occupy Unit 16, Barn
Close, Langage Industrial Estate, Plympton, Plymouth
("Plympton Property"); or
(b) any matters arising from the superior landlord taking action
in relation to unauthorised alterations carried out by the
immediate landlord at the Plympton Property; or
(c) enforcement by any party of covenants restricting the use of
the Plympton Property; or
(d) failure to obtain the side letter capping the rent at the
Plympton Property at (BT.PD.)31,000 per annum to the year 2001 and
limiting the repairing obligations to a schedule of
condition.
PROVIDED THAT the First Vendor's liability under this clause
shall not exceed (BT.PD.)15,000.
11. Transitional information technology arrangements
11.1 The Purchasers and the Vendors acknowledge and agree that the IBM
AS/400 currently located in Firth Carpets Limited's IT department
with serial number S44G1947 which is being used by Firth Carpets
Limited (through its Network Flooring Division) ("the Machine")
is and shall at all times remain the property of the First
Vendor. The First Vendor agrees that for a period of 3 months
immediately following Completion, the Vendors shall allow Firth
Carpets Limited to retain possession of the Machine and use it in
its business and the Purchasers shall pay to the First Vendor a
commercial rate for the provision of the Machine. At the end of
that 3 month period, the Machine shall be returned by and at the
cost of the Purchasers to the First Vendor, in a similar
condition (subject to fair wear and tear) to which it was at the
date of this Agreement; in the interim the Machine shall be at
the Purchasers' risk. The Purchasers shall be responsible for
obtaining any and all consents needed in respect of all software
and data to be used on the Machine whilst it is not in the First
Vendor's possession.
30<PAGE>
11.2 For the period of 3 months immediately following Completion the
First Vendor will, subject to payment by the Purchasers of a
commercial rate for such service, use its reasonable efforts to
provide appropriate alternative facilities in accordance with the
disaster recovery procedures made available to Firth Carpets
Limited prior to Completion by the First Vendor if Firth Carpets
Limited's IBM AS/400 located at its Brighouse premises becomes
unavailable for a period exceeding twelve continuous hours
provided that the First Vendor shall not be obliged to prejudice
any business critical processing of its own. The Purchasers
shall be responsible for obtaining all permissions necessary for
whatever software and data are to be run on such alternative
facilities.
11.3 The parties will use their reasonable efforts to negotiate with
JBA (United Kingdom) Limited ("JBA") an arrangement whereby the
First Vendor's licence from JBA can be used for the benefit of
the Group Members as well as for the First Vendor and the Vendor
Group. When such a licence is agreed the Purchasers shall pay
all costs associated with the arrangement for the Group Members
with JBA. For the balance of the 12 months following Completion
from the point in time when such licence is agreed, the First
Vendor shall run the software subject to the JBA licence for the
benefit of, and to process the information of, the Group Members.
The Purchasers shall pay a commercial rate for such service and
agree that the use made for the benefit of the Group Members
shall be no greater than it was before Completion.
12. SPECIFIC INDEMNITIES
12.1 The First Vendor agrees to pay to a Purchaser such amount as may
be necessary to indemnify, defend and hold harmless each
Purchaser and each Group Member from and against any and all
demands, claims, losses, liabilities, actions or causes of
action, assessments, judgments, settlement payments, damages,
fines, penalties, reasonable costs and expenses, (including,
without limitation, interest which may be imposed in connection
therewith), reasonable fees and disbursements of legal
representatives and other experts, and the cost to the Purchaser
or Group Member of any funds expended by reason of any events
specified in this clause 12 incurred or suffered by the Purchaser
or any Group Member arising out of or resulting from:-
12.1.1 any claims made against either of the Purchasers or the
Group Members by employees of the Group Members during the
period commencing on the date of Completion and ending on
the fourth anniversary of the date of termination of the
Lease in relation to sickness or injury arising as a result
of the presence of asbestos at Site 1 being South of Birkby
Lane, Brighouse during his employment there;
12.1.2 any claims made against either of the Purchasers or the
Group Members by employees of the Group Members during the
period ending on the fourth anniversary of the date of this
Agreement in relation to sickness or injury arising as a
result of the presence of asbestos at Site 2, being North of
Birkby Lane, Brighouse, and Site 3, being West of Bradford
Road, Brighouse during his employment there;
31<PAGE>
12.1.3 any personal injury or industrial accident claims made by
employees of any Group Member in respect of injuries or
accidents occurring in the period prior to the date of
Completion.
12.2 The Purchasers shall not be entitled to claim under
this clause 12 to the extent that any liability arising is
fully covered by the proceeds of insurance.
13. GENERAL
13.1 This Agreement may not be assigned by any party without the prior
written consent of each of the other parties.
13.2 Except insofar as the same have been fully performed at
Completion and subject to the provisions of paragraph 2.5 of
Schedule 7, each of the agreements, covenants, obligations,
warranties, indemnities and undertakings contained in this
Agreement will continue in full force and effect notwithstanding
Completion.
13.3 The Vendors agree that they will at the cost and expense of the
Vendors do all such acts and things and execute all such
documents as may be reasonably required on or subsequent to
Completion to vest in the Purchasers legal and beneficial
ownership of the Shares in accordance with this Agreement and
otherwise to give effect to its terms.
13.4 Upon and after Completion at the request of the Purchasers the
Vendors shall execute or procure the execution under seal/as a
deed of a power of attorney in the agreed form in favour of the
Purchasers or such person as may be nominated by the Purchasers
generally in respect of the Shares and in particular to enable
the Purchasers (or their nominees) to attend and vote at general
meetings of the English Group Members or the Dutch Group Members
during the period prior to the name of the Purchasers (or their
nominee) being entered on the register of members of the English
Group Members or the Dutch Group Members in respect of the
Shares.
13.5 Failure or delay by any party in exercising any right or remedy
under this Agreement will not in any circumstances operate as a
waiver of it, nor will any single or partial exercise of any
right or remedy in any circumstances preclude any other or
further exercise of it or the exercise of any other right or
remedy.
13.6 Any waiver of any breach of, or any default under, any of the
terms of this Agreement will not be deemed a waiver of any
subsequent breach or default and will in no way affect the other
terms of this Agreement and any such waiver to be effective shall
be signed in writing by the relevant party or parties.
13.7 The parties hereto acknowledge that:-
13.7.1 this Agreement sets forth the entire agreement between them
with respect to the subject matter covered by it and supersedes
and replaces all prior communications, drafts, representations,
warranties, stipulations, undertakings and agreements of whatsoever
nature, whether oral or written, between them relating
thereto (save where such statement, fact or opinion or
warranty or representation is repeated in this Agreement);
32<PAGE>
13.7.2 they do not enter into this Agreement in reliance on any
warranty, representation, undertaking, stipulation or
agreement other than those contained in this Agreement;
13.7.3 save as specifically provided in clauses 4.20, 4.21 and 4.22
and save for injunctive remedies to enforce any breach of
the provisions of clause 5, their only remedies are for
breach of contract on the terms set out in this Agreement or
for breach of the Warranties;
13.7.4 from Completion they have no right to rescind this Agreement
either for breach of contract or for negligent or innocent
misrepresentation;
13.7.5 without prejudice to the generality of the foregoing, the
Purchasers waive any right or remedy they may have against
any of the Vendors, in respect of any statement (whether
oral or written) of fact or opinion whatsoever, including
any untrue or misleading statement, warranty or
representation, expressed or implied, made to the Purchasers
or their agents, officers or employees during the
negotiation of or otherwise in connection with this
Agreement (save where such statement, fact or opinion or
warranty or representation is repeated in this Agreement);
13.7.6 the Consideration has been agreed by the Vendors and the
Purchaser having regard (inter alia) to the provisions of
this clause 13.7
provided that the provisions of this clause 13.7 shall not
exclude any liability which any party would otherwise have to
another or any right which any party may have to rescind this
Agreement after Completion in respect of any statements made
fraudulently by any other party prior to the execution of this
Agreement.
13.8 This Agreement may be executed in any number of counterparts, and
by the parties on separate counterparts, each of which so
executed and delivered will be an original, but all the
counterparts will together constitute one and the same agreement.
13.9 No variation of this Agreement or any document in the agreed form
shall be valid unless it is in writing signed by or on behalf of
each of the parties hereto.
13.10 The formation, existence, construction, performance,
validity and all aspects whatsoever of this Agreement or of any
term of this Agreement shall be governed by English law. The
English Courts shall have exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this
Agreement. The parties agree to submit to the said jurisdiction.
33
<PAGE>
SCHEDULE 1
----------
Details of the English Companies
--------------------------------
Name of the Company : T.F.Firth & Sons Limited
Registered number : 314535
Registered office : Clifton Mills, Brighouse
Date of incorporation : May 26th 1936
Place of incorporation : England & Wales
Status of Company : private limited company
Authorised share capital : (BT.PD.)11,000,000 divided into 12,000,000
ordinary shares of 25p each and 8,000,000
preference shares of (BT.PD.)1 each
Issued share capital : (BT.PD.)10,349,262.00 divided into
9,397,046 ordinary shares of 25p each and
8,000,000 preference shares of (BT.PD.)1 each
Directors' full names : David Austin Melbourne
Peter John Aspinall
Secretary's full name : Peter John Aspinall
Accounting reference date : 31st March
Auditors : Price Waterhouse
Bankers : Barclays
Description of business. : Holding Company
34
<PAGE>
Name of the Company : Tayrich Limited
Registered number : 1332723
Registered office : Lynn Lane
Stenstone
Lichfield
Staffordshire
WS14 0DU
Date of incorporation : 5th October 1997
Place of incorporation : London
Status of Company : private limited company
Authorised share capital : (BT.PD.)40,000 divided into 40,000 shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)30,002 divided into 30,002 shares
of (BT.PD.)1 each
Directors' full names : Paul James Wiseman
Donald David Wellings
Allan Lee Thompson
Secretary's full name : Donald David Wellings
Accounting reference date : 31st March
Auditors : Price Waterhouse, , Manchester
Bankers : Barclays Bank Plc, 17 Market Place,
Huddersfield, West Yorkshire, HD1 2AB
Description of business. : Holding Company
35
<PAGE>
Details of other English Group Members
--------------------------------------
Name of the Company : Joseph Hamilton & Seaton Limited
Registered number : 665651
Registered office : JHS House, Gerard,
Lichfield Road Industrial Estate
Tamworth
Staffordshire B79 7UW
Date of incorporation : 21st July 1960
Place of incorporation : London
Status of Company : private limited company
Authorised share capital : (BT.PD.)30,000 divided into 30,000 ordinary
shares of (BT.PD.)1 each
Issued share capital : (BT.PD.)30,000 divided into 30,000
ordinary shares of (BT.PD.)1 each
Registered Shareholders : Name & Address Number and Class
-------------- of Shares held
----------------
Tayrich Ltd 29,999 ordinary
Gerard
Lichfield Road Industrial Estate
Tamworth
Staffordshire B79 7UW
Terry Holdings (Horbury) Ltd 1 ordinary
Clifton Mills
Brighouse
West Yorkshire HD6 4ET
Directors' full names : Paul James Wiseman
Donald David Wellings
Allan Lee Thompson
Secretary's full name : Donald David Wellings
Accounting reference date : 31st March
Auditors : Price Waterhouse, , Manchester
Bankers : Barclays Bank Plc, 17 Market Place,
Huddersfield,
West Yorkshire, HD1 2AB
Description of business. : Contract Carpet Distributors
36<PAGE>
Name of the Company : Firth Carpets Limited
Registered number : 873949
Registered office : Clifton Mills, Brighouse
Date of incorporation : 16 March 1966
Place of incorporation : England & Wales
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)1,000,000 divided into 1,000,000
ordinary shares of (BT.PD.)1 each
Issued share capital : (BT.PD.)1,000,000 divided into 1,000,000
ordinary shares of (BT.PD.)1 each
Registered Shareholders : T.F. Firth & Sons Limited: 999,999
ordinary shares of (BT.PD.)1 each
Terry Holdings (Horbury) Limited: 1 ordinary
share of (BT.PD.)1 each
Directors' full names : David Austin Melbourne
Peter John Aspinall
David Booth
Malcolm Stanley Ferrar
John Kelvin Stocks
Geoffrey Howard Pickless
Lindsey Kenneth Parnell
Allan Lee Thompson
Secretary's full name : Peter John Aspinall
Accounting reference date : 31st March
Auditors : Price Waterhouse,
Bankers : Barclays Bank Plc,
Description of business. : Carpet Manufacture
37<PAGE>
Name of the Company : Network Flooring Limited
Registered number : 2707657
Registered office : PO Box 17 Clifton Mills, Brighouse
West Yorkshire HD6 4EJ
Date of incorporation : 16th April 1992
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Directors' full names : David Austin Melbourne
Jeremy John Earl
Geoffrey Howard Pickless
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Supply and installation of floor
coverings. The company does not trade in its
own right due to the agency agreement with
Firth Carpets Limited.
38<PAGE>
Name of the Company : C.F.C. (South) Limited
Registered number : 667923
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 17th August 1960
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
39
<PAGE>
Name of the Company : C.F.C. (North) Limited
Registered number : 2709529
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 24th April 1992
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Stephen Paul Rooks
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
40<PAGE>
Name of the Company : Public Contracts Limited
Registered number : 2691012
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 26th February 1992
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd : 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Stephen Cunliffe
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
41
<PAGE>
Name of the Company : Walshaw Flooring Limited
Registered number : 2711719
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 5 May 1992
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
42
<PAGE>
Name of the Company : Chris Wright Contracts Limited
Registered number : 2802755
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 24th March 1993
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
43
<PAGE>
Name of the Company : Dunn's Flooring Contractors Limited
Registered number : 2826717
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 14th June 1993
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
David Allen Evans
Ian Lofthouse
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
44
<PAGE>
Name of the Company : Armada Floors Limited
Registered number : 2870154
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 9th November 1993
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
45
<PAGE>
Name of the Company : G & I Floor Coverings Limited
Registered number : 2932847
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 25 May 1994
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Andrew Charles Janssens
Anthony John Probert
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
46
<PAGE>
Name of the Company : Modular Maintenance Limited
Registered number : 2901719
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 23 February 1994
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
47<PAGE>
Name of the Company : C.J. Murray Flooring Contractors (Aberdeen)
Limited.
Registered number : 2993105
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 22nd November 1994
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
48
<PAGE>
Name of the Company : Robertson Locke & Heggie Limited
Registered number : 3019137
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 7th February 1995
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)100 divided into 100 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 99 ordinary shares
of (BT.PD.)1 each
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
49
<PAGE>
Name of the Company : Rowan & Boden (Interiors) Limited
Registered number : 3019976
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 9th February 1995
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)2 divided into 2 ordinary shares
of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 1 ordinary share of
(BT.PD.)1
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
50
<PAGE>
Name of the Company : Rowan & Boden Limited
Registered number : 3021518
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 14th February 1995
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)2 divided into 2 ordinary shares
of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 1 ordinary share of
(BT.PD.)1
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
51<PAGE>
Name of the Company : Rowan & Boden (Scotland) Limited
Registered number : 3020462
Registered office : PO Box 17, Clifton Mills, Brighouse
West Yorkshire, HD6 4EJ
Date of incorporation : 10th February 1995
Place of incorporation : England
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)2 divided into 2 ordinary shares
of (BT.PD.)1 each
Registered Shareholders : Network Flooring Ltd: 1 ordinary share of
(BT.PD.)1
Terry Holdings (Horbury) Ltd: 1 ordinary
share of (BT.PD.)1
Directors' full names : David Austin Melbourne
Jeremy John Earl
Allan Lee Thompson
Michaela Ann Welby
Secretary's full name : Michaela Ann Welby
Accounting reference date : 31st March
Auditors : Price Waterhouse, Manchester
Bankers : Barclays Bank Plc, Huddersfield
Description of business. : Non trading company
52
<PAGE>
Name of the Company : Colourspace (UK) Limited
Registered number : 3028698
Registered office : Clifton Mills, Brighouse
Date of incorporation : 3rd March 1995
Place of incorporation : England & Wales
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)100 divided into 100 ordinary shares of
(BT.PD.)1 each
Issued share capital : (BT.PD.)2 divided into 2 ordinary shares
of (BT.PD.)1 each
Registered Shareholders : Terry Holdings (Horbury) Limited:1
ordinary share of (BT.PD.)1
Network Flooring Limited:1 ordinary share of
(BT.PD.)1
Directors' full names : David Austin Melbourne
Peter John Aspinall
Secretary's full name : Peter John Aspinall
Accounting reference date : 31st March
Auditors : Price Waterhouse
Bankers : Barclays Bank Plc
Description of business. : Dormant
53
<PAGE>
Name of the Company : Carpets from London Limited
Registered number : 905619
Registered office : Clifton Mills, Brighouse
Date of incorporation : 9 May 1997
Place of incorporation : England & Wales
Status of Company : Private Limited Company
Authorised share capital : (BT.PD.)1,000 divided into 1,000 ordinary
shares of (BT.PD.)1 each
Issued share capital : (BT.PD.)350 divided into 350 ordinary
shares of (BT.PD.)1 each
Registered Shareholders : Terry Holdings (Horbury) Ltd:1 ordinary
share of (BT.PD.)1
Firth Carpets Limited: 349 ordinary shares
of (BT.PD.)1
Directors' full names : David Booth
Peter John Aspinall
Secretary's full name : Peter John Aspinall
Accounting reference date : 31st March
Auditors : Price Waterhouse,
Bankers : Barclays Bank Plc
Description of business. : Carpet Sales Company (presently dormant)
54<PAGE>
SCHEDULE 2
PART 1
Details of the Dutch Company
----------------------------
Name of the Company : VEBE Floorcoverings B.V.
Registered number : 22291
Registered address : Genemuiden (Corporate Seat)
Date of incorporation : 06-06-1967
Status of company : Private Limited Company ("besloten
vennootschap met beperkte
aansprakelijkheid")
Authorised share capital : Dutch Guilders 100,000 divided into
200 ordinary shares of Dutch Guilders 500
each
Issued and paid-up share
capital : Dutch Guilders 60,000 divided
into 120 ordinary shares of Dutch Guilders
500 each
Beneficially owned by REX
(Netherlands) B.V : 100%
Registered and beneficial
holder of shares : Name of Company Number and Class
--------------- of shares held
----------------
The Second Vendor 120 Ordinary
Atrium Building shares of Dfl
Strawinskylaan 3037 500 each
1077 2X Amsterdam
The Netherlands
Managing Directors' full
names : Hans Holtrust
("Bestuurders") Allan Lee Thompson
William Johannes Franciscus Burmanje
Secretary's full name : Not appropriate
Supervisory Directors
("Commissarissen") : None
55<PAGE>
Accounting reference date : 31 March
Auditors : Price Waterhouse, The Netherlands
Bankers : Rabobank
Description of business : The business of the manufacture and/or
marketing of tufted and/or needlefelt
and/or plastic carpets and/or floorcoverings
and/or matting
56
<PAGE>
SCHEDULE 2
PART 2
Details of other Dutch Group Members (German subsidiary)
--------------------------------------------------------
Name of Company : Vebe Floorcoverings GmbH
Registered Number : HRB 3990
Registered address : 47829 Krefeld ("Sitz der
Gesellschaft")
Date of incorporation : 8 December 1989
Place of incorporation : Neuss
Status of company : Private Limited Company
("Gesellschaft
mit beschrankter Haftung")
Authorised share capital : Deutsch Marks 200,000 divided into
one ordinary share of Deutsche Marks
200,000 each
Issued and paid-up share
capital : Deutsch Marks 200,000 divided
into one ordinary share of Deutsche Marks
200,000
Beneficially owned by VEBE
Floorcoverings B.V : 100%
Registered and beneficial
holder of shares : Name and Address Number and Class
---------------- of shares held
-----------------
VEBE Floorcoverings B.V one ordinary share
Inslag B.V. of DM 200,000
8281 JV Genemuiden,
The Netherlands
Managing Directors' full
names ("Bestuurders") : Hans Holtrust
Allan Lee Thompson
Jozef Veldhoven
57
<PAGE>
Secretary's full name : Not appropriate
Accounting reference date : 31 March
Auditors : Price Waterhouse
Bankers : Deutsche Bank, Krefeld
Rabobank, Dusseldorf
Description of business : The marketing and negotiating of
the sale of goods, in particular
negotiating contracts concerning and
selling of floorcoverings. Furthermore,
to engage in all business which is
suitable to directly advance the purpose
of the company
58<PAGE>
SCHEDULE 2
Details of other Dutch Group Members
------------------------------------
Name of the Company : VEBE/Lenvinyl Holding B.V
Registered number : 34658
Registered address : Genemuiden (Corporate Seat)
Date of incorporation : 12-03-1982
Status of company : Private Limited Company ("besloten
vennootschap met beperkte
aansprakelijkheid")
Authorised share capital : Dutch Guilders 200,000 divided into
200 ordinary shares of Dutch Guilders
1,000 each
Issued and paid-up share
capital : Dutch Guilders 100,000 divided
into 100 ordinary shares of Dutch Guilders
1,000 each
Beneficially owned by the
VEBE Floorcoverings B.V : 100%
Registered and beneficial
holder of shares : Name and Address Number and Class
---------------- of shares held
-----------------
VEBE Floorcoverings B.V 100 ordinary shares
Inslag 12, of Dfl
8281 HV Genemuiden, 1,000 each
The Netherlands.
Managing Directors' full
names ("Bestuurders") : Hans Holtrust
Secretary's full name : Not appropriate
Accounting reference date : 31 March
Auditors : Price Waterhouse
Description of business : The participation of other
Companies
59
<PAGE>
SCHEDULE 2
Details of other Dutch Group Members
------------------------------------
Name of the Company : Vi-Backing B.V
Registered number : 34761
Registered address : Genemuiden (Corporate Seat)
Date of incorporation : 12-03-1982
Status of company : Private Limited Company ("besloten
vennootschap met beperkte
aansprakelijkeid")
Authorised share capital : Dutch Guilders 100,000 divided into
200 ordinary shares of Dutch Guilders 500
each
Issued and paid-up share
capital : Dutch Guilders 50,000 divided
into 100 ordinary shares of Dutch Guilders
500 each
Beneficially owned by the
VEBE Floorcoverings B.V : 100%
Registered and beneficial
holder of shares : Name and Address Number and Class
---------------- of shares held
----------------
VEBE Floorcoverings B.V. 100 ordinary shares
Inslag 12, of Dfl
8281 JV Genemuiden, 500 each
The Netherlands.
Managing Directors' full
names (Bestuurders") : Hans Holtrust
Secretary's full name : Not appropriate
Accounting reference date : 31 March
Auditors : Price Waterhouse
Description of business : International trade in floorcoverings and
textiles, in the widest sense of the word,
60<PAGE>
whether or not through intervention of agents
and sales representatives, as well as the
incorporation of, obtaining of and financing
of the management of the other companies
61<PAGE>
SCHEDULE 2
Details of other Dutch Group Members
------------------------------------
Name of the Company : Visscher & Beens Lenvinyl
Verkoopmaatschappij B.V
Registered number : 33108
Registered address : Genemuiden (Corporate Seat)
Date of incorporation : 18-11-1970
Status of company : Private Limited Company ("besloten
vennootschap met beperkte
aansprakelijkheid")
Authorised share capital : Dutch Guilders 50,000 divided into
50 ordinary shares of Dutch Guilders 1,000
each
Issued and paid-up share
capital : Dutch Guilders 12,000 divided
into 12 ordinary shares of Dutch Guilders
1,000 each
Beneficially owned by the
VEBE Floorcoverings B.V : 100%
Registered and beneficial
holder of shares : Name and Address Number and Class
---------------- of shares held
----------------
VEBE Floorcoverings B.V. 12 ordinary shares
Inslag 12, of Dfl
8281 HV Genemuiden, 1,000 each
The Netherlands.
Managing Directors' full
names ("Bestuurders") : Hans Holtrust
Secretary's full name : Not appropriate
Accounting reference date : 31 March
Auditors : Price Waterhouse
62<PAGE>
Description of business : The processing of (end manufacture: attaching
of backing to carpet) and improving of
carpets and related articles, in the widest
sense of the words, participation in
companies with a similar related business as
that of the company thereunder understood
63<PAGE>
SCHEDULE 2
Details of other Dutch Group Members
------------------------------------
Name of the Company : Lenvinyl B.V
Registered number : 22279
Registered address : Genemuiden (Corporate Seat)
Date of incorporation : 30.03.1967
Status of Company : Private Limited Company ("besloten
vennootschap met beperkte
aansprakelijkheid")
Authorised share capital : Dutch Guilders 100,000 divided into
100 ordinary shares of Dutch Guilders
1,000 each
Issued and paid-up share
capital : Dutch Guilders 100,000 divided into
100 ordinary shares of Dutch Guilders
1,000 each
Beneficially owned by the
VEBE Floorcoverings B.V : 100%
Registered and beneficial
holder of shares : Name of Address Number and Class
--------------- of shares held
----------------
VEBE Floorcoverings B.V. 100 ordinary shares
Inslag 12, of Dfl
8281 JV Genemuiden, 1,000 each
The Netherlands.
Managing Directors' full
names ("Bestuurders") : Hans Holtrust
Secretary's full name : Not appropriate
Accounting reference date : Financial year runs from April
1 to April 1 the following year
64<PAGE>
Auditors : Price Waterhouse
Description of business : Management Company
65
<PAGE>
SCHEDULE 3
----------
Part 1
------
The English Property
--------------------
1. FIRTH CARPETS LIMITED
---------------------
1.1 Freehold
--------
1.1.1 Land and Buildings to the North of Birkby Lane and East
of Bradford Road Bailiff Bridge Brighouse as shown edged red
on the plan annexed hereto as Appendix "A" being part of
title number WYK 503599
1.1.2 4 Highfield Avenue Bailiff Bridge Brighouse
Subject to Voluntary Registration. Title Number : Not yet
allocated
1.1.3 49 Highfield Avenue Bailiff Bridge Brighouse
Subject to Voluntary Registration. Title Number : Not yet
allocated
1.1.4 Land and Buildings on the west side of Victoria Road
known as Victoria Mills Bailiff Bridge Brighouse as shown
edged red on the plan annexed hereto as Appendix "A" being
part of title number WYK503599
1.1.5 Land and Buildings lying on the south side of Heage
Road Ripley Derbyshire
Registered Title Number : DY265774
1.2 Leasehold
---------
1.2.1 Aberdeen : Unit 27 Denmore Industrial Estate Denmore Road
1.2.2 Birstall : Oakwell Way Kirklees West Yorkshire : Units
2 and 2A Triangle Business Park Oakwell Way
Registered Title Numbers : WYK541856 and WYK571067
1.2.3 Cardiff : Unit 88 Portmanmoor Road Industrial Estate
1.2.4 Gateshead : Tyne and Wear : Arcon House Sunderland Road
Felling
1.2.5 Glasgow : Unit 2B The Apex Tannochside Park Uddingston
1.2.6 London
------
66<PAGE>
1.2.6.1 Suites 113, 215 and 216 Business Design Centre, 52
Upper Street, Islington N1
1.2.6.2 Unit 1 Kendal Court Western Avenue Business Centre
Kendal Avenue W3
2 NETWORK FLOORING LIMITED
------------------------
Leasehold
---------
2.1 Plymouth : Unit 16 Barn Close Langage Industrial Estate Plympton
2.2 Warrington : Unit 3 Gemini West Business Park
2.3 Cardiff : Units B7 and B8 East Point Spring Meadow Industrial Park
3 JOSEPH HAMILTON AND SEATON LIMITED
----------------------------------
Leasehold
---------
3.1 Units 1 2 3 4 and 5 Mariner Lichfield Road Industrial Estate
Tamworth Staffordshire.
Registered Title Number (for Units 1 and 2) : SF165237
67
<PAGE>
SCHEDULE 3
----------
Part 2
------
The Dutch Property
------------------
1. Address/description of Property
-------------------------------
Nijverheidstraat, Genemuiden, The Netherlands.
Registered Owner
----------------
Vebe Floorcoverings B.V.
Short Particulars
-----------------
Freehold ("eigendom") property comprising of an industrial
terrain with a total area of 1 hectare and 68 centiare are being
registered at the Zwolle Land Registry ("Kadaster") under number:
Section K, number 712;
2. Address/description of Property
-------------------------------
Nijverheidstraat, Genemuiden, The Netherlands.
Registered Owner
----------------
Vebe Floorcoverings B.V.
Short Particulars
-----------------
Freehold ("eigendom") property comprising of an industrial
terrain with a total area of 9 hectare and 55 centiare being
registered at the Zwolle Land Registry ("Kadaster") under number:
Section K, number 715;
3. Address/description of Property
-------------------------------
Inslag 12, 8281 JV Genemuiden, The Netherlands.
Registered Owner
----------------
Vebe Floorcoverings B.V.
Short Particulars
-----------------
Freehold ("eigendom") property comprising of a factory, offices
and land with a total area of 3 hectare, 73 are and 79 centiare
being registered at the Zwolle Land Registry ("Kadaster") under
number: Section K, number 594; and
68<PAGE>
4 Address/description of Property
-------------------------------
Inslag 12, 8281 JV Genemuiden, The Netherlands.
Registered Owner
----------------
Vebe/Lenvinyl Holding B.V.
Short Particulars
-----------------
Freehold ("eigendom") property comprising of a factory with
premises with a total area of 2 hectare, 18 are and 79 centiare
being registered at the Zwolle Land Registry ("Kadaster") under
number: Section K, number 595.
5 Address/description of Property
-------------------------------
Admiraal de Ruyterstraat 10, Genemuiden, The Netherlands.
Registered Owner
----------------
Lenvinyl B.V.
Short Particulars
-----------------
Freehold ("eigendom") property comprising of a house with a total
area of 1 are and 60 centiare being registered at the Zwolle Land
Registry ("Kadaster") under number: Section C, number 2527
Note:
- ----
In the Land Registry there is registered that on the properties K 712
and K 595 there is a so-called commercial right ("zakelijk recht") in
favour of the Energy Company, N.V. Energie Distributie maatschappij
voor Oost- en Noord-Nederland, EDON.
Furthermore, a re-numbering at the Zwolle Land Registry has taken
place whereby the former numbers K 31, K 691 and K 686 have been re-
numbered into K 715, and former number K 654 has re-numbered to K 712.
Furthermore it was noted that there is a slight discrepancy which
occurred in such a re-numbering as far as the acreage is concerned and
this is probably due to a more precise establishing of the correct
acreage.
The Dutch Leased Properties
- ---------------------------
6. Address/Description of Property
-------------------------------
69
<PAGE>
Description: Office/storage space
Address: Schering 7 in Genemuiden, The Netherlands
Parties to the lease
--------------------
Landlord: Heutink Beheer B.V.
Tenant: Vebe Floorcoverings B.V.
Date of Lease
-------------
September 1995
Term of Lease
-------------
5 years with effect from October 30, 1995
Rent
----
NLG 120,240 (excluding VAT) per annum (1995) plus annual
indexation on 1st January of each year.
The German Leased Property
- --------------------------
7. Address/Description of Property
-------------------------------
Description: Office/archives space
Address: Europark Fichtenhain A 13 a, 47807 Krefeld
Parties to the lease
--------------------
Landlord: MeRo Gewerbeimmobilien GmbH & Co. REGIUM KG
Tenant: Vebe Floorcoverings GmbH (before:
Vebe/Lenvinyl Warenvertriebsgesellschaft mbH)
Date of lease
-------------
August 1993
Term of years
-------------
10 years with effect from 1 December 1993
Rent
----
DM 7.776,00 (excluding VAT) per month plus DM 1.436,00 additional
property expenses plus DM 40,00 for each additional parking lot plus
annual indexation each year.
70
<PAGE>
SCHEDULE 4
----------
Part 1
------
English Non-Taxation Warranties
-------------------------------
1 Interpretation
--------------
In this Part 1 of Schedule 4 the following expressions have the
following meanings:-
Expression Meaning
---------- --------
"the Accounting Date" 31 March 1997
"the Accounts" The audited accounts of each English
Group Member for the financial year which
ended on the Accounting Date, comprising in
each case the audited balance sheet, the
audited profit and loss account, notes and
directors' and auditors' reports
"Company" Notwithstanding the definition contained
in clause 1, each company individually
details of which are set out in Schedule
1 shall be a Company as if the English
Warranties were set out in full in respect
of each such company provided that where
used other than in this Schedule 4 and
Schedule 5 Company shall have the meaning
given in clause 1
"Contract" Any oral or written legally binding
agreement, arrangement or understanding
"Environment" Any air (including air within natural or
man-made structures above or below
ground); water (including territorial,
coastal and inland waters and ground
water and water in drains and sewers);
and land (including the seabed or
riverbed under any water), surface land
and sub-surface land
"Environmental All or any permits, consents, licences,
Consents" registrations approvals, certificates,
and other authorisations required
under Environmental Law and all
terms and conditions thereof required
under any Environmental Law for the
operation of the business of the Company
at the date of this Agreement
"Environmental Law" All or any Laws with regard to the
pollution or protection of the
Environment or the protection of
71<PAGE>
the health and welfare of humans and/or
organisms supported by the Environment
from harm resulting from contact with or
exposure to Hazardous Substances save that
the EA Provisions shall be deemed to be in
force at Completion for the purposes of
Warranty 21
"EA Provisions" Part II and paragraphs 161 and 162 of
Schedule 22 of the Environment Act 1995
and the first complete set of regulations
and guidance under those provisions except
(in the event that they are not already in
force at Completion) to the extent that the
above when they come into force are more
onerous than the versions of such
provisions which exist in draft form at
Completion
"Laws" All or any applicable law (whether criminal,
civil or administrative), common law,
judgment, court order, statute, statutory
instrument, regulation, directive (to the
extent it has been implemented by
legislation), European Community decision
(insofar as legally binding), bye-law,
directly applicable treaty, government
circular, code of practice and guidance
notes which are in force at the date of
this Agreement
"Pension Scheme" The Readicut International Pension Fund and
the Readicut International Executive
Pension Scheme
"Stock" Stocks (as defined in Statement of Standard
Accounting Practice No.9 adopted by the
Accounting Standards Board) of the
Company.
2 Disclosure of Information
-------------------------
2.1 The facts set out in the text of the Original Disclosure Letter
in relation to Part 1 of Schedule 4 (but for the avoidance of
doubt excluding the Disclosure Bundle as defined in the Original
Disclosure Letter and excluding any matters deemed to be
disclosed therein, including but not limited to paragraphs 1 to
11 therein) are true, complete and accurate in all material
respects and not misleading.
2.2 The text of the replies made to the legal due diligence enquiries
raised by the Purchasers' Solicitors (which replies together with
supplemental replies are attached at document in the Disclosure
Bundle as attached to and defined in the Original Disclosure
Letter (the "Replies")), but for the avoidance of doubt excluding
any enclosures or attachments thereto or any documents referred
to therein, are true, complete and accurate in all material
respects and not misleading (save that if there is any
inconsistency between the Replies and the text of the Original
Disclosure Letter, the latter shall prevail and there shall be no
breach of this paragraph 2.2 to the extent that the text of the
72<PAGE>
Original Disclosure Letter conforms with paragraph 2.1 above or
paragraph 2.1 of Part 2 of Schedule 4).
3 Schedule 1 : Capital
--------------------
3.1 The information contained in Schedule 1 is accurate.
3.2 The English Shares are in issue fully paid , are beneficially
owned and registered as set out in Schedule 1 free from any third
party right and constitute the whole of the issued share capitals
of the English Companies.
3.3 No Contract has been entered into which requires or may require
the Company to allot or issue any share or loan capital or to
create any Encumbrance over any share or loan capital and no
claim has been made in writing to the First Vendor or, so far as
the First Vendor is aware, to the Company by any person to be
entitled to any such Contract.
3.4 The Company has no interest in the share capital of any body
corporate save as specified in Schedule 1.
4 Capacity of the First Vendor
----------------------------
4.1 The First Vendor has full power to enter into and perform this
Agreement and the transaction and matters contemplated hereby and
has taken all necessary action to authorise the entry into and
performance of this Agreement and the transactions and matters
contemplated hereby.
4.2 Each of the obligations expressed to be assumed by the First
Vendor under this Agreement and any agreement hereby contemplated
constitutes a valid and binding obligation on the First Vendor.
4.3 The execution and performance of this Agreement by the First
Vendor is not prohibited or restricted by any provision of law or
any other matter or thing and in particular but without
limitation is not subject to the approval or consent of any
governmental authority or regulatory body or otherwise save for
the approval of shareholders referred to in the condition in
clause 6.1
4.4 There is no litigation arbitration prosecution administrative or
other legal proceedings or dispute in existence or threatened
against the First Vendor in respect of the English Shares or the
First Vendor's entitlement to dispose of the English Shares and
there are no facts known to the First Vendor which will give
rise to any such proceedings or any such dispute.
4.5 The Company has not received any notice of or any application or
notice of any intended application under the provisions of the
Act for the rectification of the Register of Members of the
Company.
73<PAGE>
4.6 The First Vendor has not exercised nor purported to exercise or
claim any lien over the English Shares and no call on the English
Shares is outstanding.
4.7 The Company has not at any time given any unlawful financial
assistance in connection with the purchase of shares as would
fall within the provisions of Sections 151 to 157 of the Act.
5 Dormant Companies
-----------------
All of the companies in Schedule 1 and identified therein as non-
trading have at all times been dormant within the meaning of
section 250(3) of the Act and such companies do not have any
outstanding liabilities in excess of (BT.PD.)1,000 in aggregate.
6 Accounts and records
--------------------
6.1 The Accounts:-
6.1.1 comply with the requirements of the Act and have been
prepared in accordance with all applicable accounting
standards (as that term is defined in section 256 of the
Act);
6.1.2 have been prepared on bases and principles which are
consistent with those used in the preparation of the audited
statutory accounts of the Company for the three financial
years immediately preceding that which ended on the
Accounting Date; and
6.1.3 show a true and fair view of the state of affairs of
the Company as at the Accounting Date and of the profit or
loss of the Company for the financial year ended on that
date.
6.2 Without limiting the generality of paragraph 6.1 above:
6.2.1 except as stated in the audited balance sheets and
profit and loss accounts of the Company for each of the last
three preceding financial years of the Company ended on the
Accounting Date no changes in the policies of accounting
have been made therein for any of those three financial
years and the method of valuing stock and work in progress
and the basis of depreciation and amortisation adopted has
been consistent during each of these three financial years;
6.2.2 the profits shown by the audited profit and loss accounts of
the Company for each of the last three preceding financial
years ended on the Accounting Date have not (except as
therein disclosed) been affected by any extraordinary item
or by any other factor rendering such profits for all or any
of such periods unusually high or low;
74<PAGE>
6.2.3 no asset (whether fixed intangible investment or current)
has been revalued upwards in the Accounts and no intangible
asset has been brought into the Accounts;
6.3 The Management Accounts relating to the English Group Members
have been carefully prepared in good faith on a basis consistent
with the previous monthly management accounts of the Company and
are not misleading.
6.4 True copies of the Accounts and of the audited accounts for each
financial year of the Company preceding that which ended on the
Accounting Date have been laid before the Company in general
meeting and delivered to the Registrar of Companies in compliance
with the Act.
6.5 All the accounts, books, registers, ledgers and financial and
other material records of whatsoever kind of the Company
(including all invoices and other records required for VAT
purposes) are up-to-date in all material respects, in its
possession or under its control and have been fully properly and
accurately kept and compiled in all material respects.
7 Business Name
-------------
7.1 The Company does not use any name for any purpose other than its
full corporate name.
7.2 The Company does not use any trade names other than the Trade
Names in connection with its business.
7.3 The Company has an unrestricted right to use the name "Tretford".
ASSETS
------
8 Unencumbered title
------------------
8.1 Each material asset (other than the English Property) described
and included in the Accounts and/or in the books of account or
records of the Company (other than for Stock disposed of by the
Company in the ordinary course of its business since the
Accounting Date):
8.1.1 is in the legal and beneficial ownership of the Company
; and
8.1.2 is in the possession or under the control of the
Company in the United Kingdom;
8.1.3 is free from all Encumbrances and there is no agreement
or commitment to give or create, and no claim has been made
in writing to the First Vendor or to the Company that any
claim has been made by any person entitled to any
Encumbrance.
75<PAGE>
In this paragraph 8 "material asset" shall mean any asset having
a book value in excess of (BT.PD.)1,000.
8.2 None of the material assets referred to in paragraph 8.1 are the
subject of any royalty, leasing or hiring agreement, hire
purchase agreement or, agreement for payment on deferred terms.
9 Debtors/Work in Progress
------------------------
9.1 The Company has not factored or discounted any debt or agreed to
do so.
9.2 The Company is not owed sums other than trade debts incurred in
the ordinary course of business.
10 Stock/Defective Products
------------------------
10.1 The stock now held by the Company and not written off or
provided for in part in the Completion Accounts:-
10.1.1 is not obsolete, slow moving, damaged or unsaleable;
and
10.1.2 of satisfactory quality.
10.2 No products manufactured or installed by the Company:-
10.2.1 are or are likely to become faulty or defective in any
respect;
10.2.2 fail to comply with any applicable laws or regulations in
force when such products were manufactured; or
10.2.3 fail to comply with the terms of sale subject to which any
such products have been sold;
and which in aggregate would lead to claims which are materially
different from claims which have arisen in the 12 months
preceding the date of Completion (including any such claims as
identified in the Disclosure Letter).
11 Plant etc.
----------
11.1 So far as the First Vendor is aware, the plant and machinery,
vehicles, fixtures and fittings, furniture, tools and other
equipment used in the business of the Company are in a
reasonable state of repair and condition having regard to their
age and use and are in adequate working order and none of such
plant etc is out of date or dangerous, or in need of renewal
involving expenditure in excess of (BT.PD)100,000 or fails to comply in
all material respects with legally binding safety standards.
76
<PAGE>
11.2 The plant registers of the Company comprise in all material
respects a complete and accurate record of all material items of
plant, machinery, equipment and vehicles owned or used by the
Company (and for this purpose a material item shall be one whose
value exceeds (BT.PD)5,000).
12 English Property
----------------
Property comprises all real property
------------------------------------
12.1.1 The English Property comprises all the land and premises of
any tenure owned, used or occupied by the English Group
Members or in which they have agreed to acquire any interest
and the particulars of it set out in Schedule 3 are true and
accurate in all respects.
12.1.2 The English Property comprises the whole of the land in
which the English Group Members have any interest (including
rights under options, rights of pre-emption or other
contractual relationship).
12.2 Title
-----
12.2.1 All deeds and documents relating to the English Property are
in the possession or under the control of the English Group
Members.
12.2.2 The replies given by the Vendors' Solicitors (as varied by
any subsequent correspondence) to the Purchasers' Solicitors
written enquiries relating to the English Property were when
given and are now true and accurate in all material
respects.
12.3 Encumbrances
------------
12.3.1 The English Property is not subject to any mortgage or
charge given as security for finance.
12.3.2 So far as the First Vendor is aware it has not been notified
of any breach of any covenants, restrictions, reservations,
conditions, agreements, statutory requirements, bye-laws,
orders, building regulations and other stipulations and
regulations affecting the English Property and its use which
have not been rectified.
12.3.3 So far as the First Vendor is aware it has not been notified
of any breach of the terms of any lease or tenancy agreement
under which any part of the English Property is held which
has not been rectified.
77
<PAGE>
12.4 Vacant Possession/rights of occupation
--------------------------------------
So far as the First Vendor is aware no part of the English
Property is subject to any (or any agreement to grant any) lease,
tenancy or licence
12.5 Use
---
12.5.1 In this subclause "the Planning Acts" shall mean the Town
and Country Planning Act 1990, the Planning (Consequential
Provisions) Act 1990 and the Planning and Compensation Act
1991 and any other legislation made pursuant to those Acts
(or replacing, amending or supplementing them) relating to
the use, occupation or development of the English
Properties.
12.5.2 So far as the First Vendor is aware it has not been notified
of any breach of the Planning Acts in relation to the
English Property which has not been rectified.
12.6 The transfer prior to the date of this Agreement by Firth Carpets
Limited to the First Vendor of freehold property at Bailiff
Bridge, Brighouse was effected at the market value of such
property for its current use.
12.7 The First Vendor believes that the repairs required by the
schedule of dilapidations which has been served on Network
Flooring in relation to Unit 88 Portmanmoor Road Industrial
Estate Cardiff and which is attached as document 23a File 5 of
the Disclosure Bundle will not cost more than (BT.PD)5,000 (excluding
VAT) to carry out and that the repairs which are likely to be
required by the Landlord of Unit 1 Kendal Court Western Avenue
Business Centre Kendal Avenue London W3 to put those premises
into a state and condition required by the tenant's covenants in
the lease of those premises will not cost more than (BT.PD)30,000
(exclusive of VAT) to carry out.
13 Intellectual Property Rights
----------------------------
13.1 The Company has no interest in any Intellectual Property
(whether registered or not) save for the Intellectual Property
details of which (including ownership, and, in the case of
registered rights, registration, priority and renewal dates) are
given in the Original Disclosure Letter all of which are (where
applicable) registered solely in the name of the Company and are
beneficially owned by it with unencumbered title.
13.2 So far as the First Vendor is aware, the processes employed and
the products and services dealt in by the Company do not use,
embody or infringe any Intellectual Property vested in any other
person.
13.3 The Intellectual Property owned by the Company and which is
registered and referred to in the Original Disclosure Letter is
valid and subsisting and so far as the First Vendor is aware the
Intellectual Property owned by the Company, which is not
registered and which is referred to in the Original Disclosure
Letter is valid and subsisting.
13.4 The First Vendor has not and nor has the Company received any
78<PAGE>
written indication that the Intellectual Property owned by the Company
and referred to in the Original Disclosure Letter is the subject of any
pending or threatened proceedings for opposition, cancellation,
revocation or rectification or claims by any person (including without
limitation any from employees, or former employees of the
Company) and so far as the First Vendor is aware there are no
matters or facts which will give rise to any such proceedings or
claims.
13.5 The Company has taken all steps reasonably necessary for the
maintenance of all the registered Intellectual Property owned by
the Company and referred to in the Original Disclosure Letter and
so far as the First Vendor is aware it has taken all steps
reasonably necessary for the maintenance of all unregistered
Intellectual Property owned by the Company and referred to in the
Original Disclosure Letter.
13.6 All application and renewal fees and costs and charges regarding
the Intellectual Property owned by the Company and referred to in
the Original Disclosure Letter due on or before Completion have
been duly paid in full.
13.7 The First Vendor has not and nor has the Company received any
written indication that any of the Intellectual Property owned by
the Company and referred to in the Original Disclosure Letter is
currently being infringed by any third party or have been so
infringed in the 12 month period preceding Completion and so far
as the First Vendor is aware no third party is planning, or has
threatened, any such infringement.
13.8 Save for those agreements listed in the Original Disclosure
Letter the carrying on of the Company's business or businesses as
presently constituted does not require any licences or consents
from or the making of royalty or similar payments to any third
party which are material for running of the Company's business.
So far as the First Vendor is aware, the Company is not in breach
of any such listed agreements.
13.9 So far as the First Vendor is aware, there are no outstanding
claims which have been made against the Company for infringement
of any Intellectual Property used or which has been used by it
and no such claims have been settled by the giving of any
undertakings which remain in force.
13.10 So far as the First Vendor is aware, the Company is not
passing off any part of its business as and for the business of
any other person and the First Vendor has not and nor has the
Company been notified in writing that any person is passing off
its business as and for any part of the Company's business.
13.11 The Company has not entered into any Contract relating to
the licensing or use (by it or any other person) of any
Intellectual Property (other than confidentiality agreements in
the ordinary course of business).
13.12 So far as the First Vendor is aware the designs stored in
the Company's design library were all produced by employees of
the Company, the Company owns the copyright to all such designs
free from all Encumbrances and all such designs are properly
stored with sufficient evidence for the Company to be able to
prove copyright.
79<PAGE>
13.13 Confidential Information
------------------------
13.13.1 So far as the First Vendor is aware, the Company does not
use any processes and is not engaged in any activities
which involve the misuse of any confidential information
belonging to any third party nor has the Company been
notified of any alleged misuse of such by it.
13.13.2 So far as the First Vendor is aware, the Company has not
been notified that any person has or is alleged to have
misused any of its Confidential Information.
13.13.3 The Company has not disclosed to any person any of its
Confidential Information except where such disclosure was
properly made in the normal course of the Company's
business or was required by law or contract.
13.15 Computer Systems
----------------
13.15.1 All copies of computer programs used on the Computer
Systems (save for those described as owned by the Company
in the Original Disclosure Letter) are used by the Company
under software licences granted to the Company by the
persons claiming to be the owners or licensees of the
intellectual property in those computer programs. The
Company has not received notice of termination of any
software licence in respect of those computer programs.
13.15.2 The computer maintenance contracts specified in the
Original Disclosure Letter are current and the Company has
the benefit of those computer maintenance contracts. The
Computer Systems are in all material respects being
maintained to the Company's satisfaction under those
maintenance contracts and the Company has no cause to
terminate any computer maintenance contract nor are there
any disputes under those maintenance contracts.
13.15.3 The Company is registered under the Data Protection Act
1984 for all classes of data stored on the Computer Systems
and for all uses or disclosure of that data made by it.
The Company is not the subject of any complaint or
proceedings under the Data Protection Act 1984 nor is it
aware that it is subject to any investigation by the Office
of the Data Protection Registrar.
13.15.4 The hardware comprised in the Computer System is owned by
the Company and is free of any security interest or other
encumbrance in favour of a third party.
13.15.5 The Company's disaster recovery planning is detailed in the
Original Disclosure Letter with respect to the Computer
Systems.
13.15.6 If any person providing maintenance or support services for
applications software comprised in the Computer Systems
(but not, for the avoidance of doubt, off the shelf
software) ceases or is unable to do so, the Company has
all necessary rights to obtain the source code and all
related technical and other information to procure the
carrying out of such services by the Company's own
employees or by a third party.
80<PAGE>
13.15.7 The Company has sufficient technically competent and
trained employees to ensure the proper operation,
monitoring, use and security of the Computer Systems.
13.15.8 The Company has procedures, in accordance with good
industry practice, to ensure internal and external security
of the Computer Systems including procedure for taking and
storing, on-site and off-site, back-up copies of computer
programs and data and that the Company complies with the
British Standards Institute code for Information Security
Management and with BS7799.
13.15.9 The Company's Computer System is capable, within a period
of one year from Completion, of being made to be or being
replaced with a system which is millennium compliant in
that the advent of the 21st Century (that is, the
commencement of years prefixed by "20" as opposed to "19")
will not affect the performance of the Computer System.
The Original Disclosure Letter contains a summary of the
Company's policy on millennium compliance.
13.15.10 So far as the First Vendor is aware all computer software
or hardware procurement projects, whether or not these
have been specified or mentioned in the Original Disclosure
Letter (the "IT Projects") are:
13.15.10.1 proceeding according to the timescales determined
by the Company for completion of each IT Project;
and
13.15.10.2 within the budget allocated by the Company for
each IT Project.
EMPLOYEES
---------
14 Remuneration and employees
--------------------------
14.1 All material particulars of the identities, dates of
commencement of employment (or appointment to office) and terms
and conditions of employment (including remuneration and any
bonus, commission, share incentives or profit sharing
arrangement) of all the employees and officers of the Company are
enclosed with the Original Disclosure Letter.
14.2 No material change has been made since the Accounting Date
in the terms of employment of any Senior Employee or in the terms
of employment of any of the other employees at large which taken
as a whole would constitute a material change at the date of this
Agreement, and the Company is not party to any Contract to make
any such change.
81<PAGE>
14.3 There are no amounts owing to any present or former
officers or employees of the Company (including PAYE and national
insurance and pensions contributions), other than remuneration
accrued (but not yet due for payment) in respect of the calendar
month in which this Agreement is executed or reimbursement of
business expenses incurred during such month, and none of them is
entitled to accrued holiday pay other than in respect of the
Company's current holiday year or in respect of holiday carried
forward from the immediately preceding holiday year.
14.4 No Senior Employee has been engaged by the Company since
the Accounting Date and no Senior Employee at or since the
Accounting Date has ceased, or given or received notice to cease,
to be so employed or will be legally entitled to give notice as a
result of the provisions of this Agreement.
14.5 The Company has maintained adequate records regarding the
service of each of its employees (and so far as relevant to each
of its former employees) and complied in all material respects
with all agreements for the time being relating to them and has
in the last 9 months complied in all material respects with all
legally binding obligations imposed on it by Articles of the
Treaty of Rome, European Commission Regulations and Directives
and all statutes regulations and legally binding codes of conduct
relevant to the relations between it and its employees or it and
any employee representatives and has in the last 9 months
complied in all material respects with all relevant orders and
awards made under any statute affecting the conditions of service
of its employees or former employees.
14.6 The Company has not recognised any trade union and the
Company is not a party to any collective agreement with any trade
union.
14.7 The Company has not introduced any short time working
scheme or any redundancy scheme under which payments greater than
those required by statute are payable.
14.8 The Company is not involved in any disputes and so far as the
First Vendor is aware there are no circumstances which may result
in any dispute involving any of the officers or employees or
former employees of the Company.
14.9 No monies or benefits other than in respect of contractual
emoluments are payable to any of the officers or employees of the
Company and so far as the First Vendor is aware there is not at
present a claim occurrence or state of affairs which is likely
hereafter to give rise to a claim against the Company arising out
of the employment or termination of employment of any employee or
former employee for compensation for loss of office or employment
and whether under the Employment Rights Act 1996 the Disability
Discrimination Act 1995 Equal Pay Act 1970 Race Relations Act
1975 Sex Discrimination Act 1975 or any other Act.
14.10 In relation to each of the present officers or employees of
the Company (and so far as relevant to each of its former
employees) the Company has complied with all collective
agreements.
82<PAGE>
14.11 The Firth Carpets Friendly Society is adequately funded to meet
all its current obligations and the Company will incur no
liability in respect of the period prior to Completion as a
result of such Friendly Society failing to meet its obligations.
14.12 No agent engaged by Firth Carpets Limited whose engagement is not
subject to a written contract has been engaged on terms which are
materially different to those of any other agent engaged by Firth
Carpets Limited and in particular (but without limitation) no
such agent is entitled to a payment on termination of his agency
which exceeds the average annual commission received by that
agent calculated as an average of the previous five year's
payments.
14.13 No commercial agent has been engaged by the Company on terms that
that agent is granted exclusive agency rights in relation to a
particular territory in respect of which (or part of which) the
Company has granted agency rights (whether or not exclusive) to
another agent.
14.14 No commissions are outside the Company's contractual payment
terms with such agents and so far as the First Vendor is aware
there are no current disputes in relation to commissions payable
or otherwise in respect of any agency agreement (whether written
or not) entered into by the Company.
14.15 No agent, contractor, sub-contractor or consultant who is engaged
or has been engaged to provide services to the Company (whether
or not the terms of such engagement have been disclosed) is
entitled to claim the status of employee and the Company has not
been notified in writing of any actual pending threatened or
potential claims from any such individual under the Employment
Rights Act 1996, the Equal Pay Act 1980 or any other Act.
14.16 There are no outstanding liabilities in respect of the
redundancies made by the Company since the Accounting Date and
the Company has not been notified that any further claims will be
made against the Company in respect of those redundancies.
15 Pensions
--------
15.1 Save under the Pension Scheme there is not in existence, and no
proposal has been announced to establish, any retirement, death
or disability benefit scheme for officers or employees or any
obligation to or in respect of present or former officers or
employees or the dependants of any such person with regard to
retirement, death or disability pursuant to which the English
Group Members are or may become liable to make payments and no
pension or retirement or sickness gratuity or payment or benefit
in connection with loss of office or employment is currently
being paid or has been promised by the English Group Members to
or in respect of any former officer or former employee or a
dependant of any such person.
83<PAGE>
15.2 In relation to each of the Pension Schemes as defined in Clause
1.1 of this Agreement and the Joseph Hamilton & Seaton Limited
Executive Pension Plan (established by declaration of trust dated
4 October 1974), the Joseph Hamilton & Seaton Pension Plan
(established by declaration of trust dated 15 December 1982) and
the Joseph Hamilton & Seaton Group Personal Pension Scheme with
Albany Life all material particulars of each of these schemes
have been disclosed in or are annexed to the Original Disclosure
Letter including true and complete copies of the trust deeds,
rules and other documents containing the provisions currently
governing the scheme, copies of the booklets and of any other
announcements or employee literature issued to employees of the
English Group Members who are or may become members of the
scheme, full details of the past practice under the scheme of
providing discretionary increases to pensions in payment and in
deferment, full details of any material exercise of any power or
discretion under the scheme to augment benefits or to provide new
or additional benefits which would not otherwise be provided or
to admit to membership any person who would not otherwise be
eligible for membership or to pay any contribution which would
not otherwise be paid and a list of those employees and officers
of the English Group Members who are active members of the scheme
setting out all information required to determine their
respective entitlement to benefits under the scheme.
15.3 The Joseph Hamilton & Seaton Limited Executive Pension Plan, the
Joseph Hamilton & Seaton Pension Plan and the Joseph Hamilton &
Seaton Group Personal Pension Scheme provide money purchase
benefits only (as defined in Section 181 of the Pension Schemes
Act 1993) and no promise has been made to or discussed with the
employees or officers employed or serving in the English Group
Members as to the level of benefits to be provided under these
schemes.
15.4 Contributions have been paid to all the pension schemes referred
to in warranty 15.2 either at the rate recommended in the last
actuarial valuation or as stated in the explanatory literature
and there are no contributions due or outstanding at the date of
this Agreement.
15.5 All lump sum benefits (other than refunds of contributions)
payable under the Pension Schemes on the death of a member are
fully insured under a policy effected with an insurance company
and all insurance premiums payable have been paid.
15.6 So far as the First Vendor is aware, there are not in respect of
any of the pension schemes referred to in warranty 15.2, any
actions, suits or claims (other than routine claims for benefits)
outstanding, pending or threatened against the trustees or
administrator of the pension scheme or against the English Group
Members and, so far as the First Vendor is aware, there are no
circumstances which might give rise to any such claim.
15.7 All of the pension schemes referred to in warranty 15.2 are
approved or capable of approval as exempt approved schemes within
the meaning of Chapter I or Chapter IV Part XIV Taxes Act.
15.8 So far as the First Vendor is aware, nothing has been done or
omitted to be done which will or may result in any of the pension
schemes referred to in warranty 15.2 ceasing to be an exempt
approved scheme and, in relation to any pension scheme which is
not yet so approved, there are no circumstances which might give
the Inland Revenue reason to withhold such approval.
84<PAGE>
15.9 The English Group Members have not and will not prior to
Completion have any liability to make any payment to the Pension
Scheme pursuant to Section 75 Pensions Act 1995 or any
undischarged liability pursuant to Regulation 3 of the
Occupational Pension Schemes (Deficiency on Winding up etc)
Regulations 1996.
15.10 The Joseph Hamilton & Seaton Limited Executive Pension Plan and
the Joseph Hamilton & Seaton Pension Plan hold insurance policies
which will be assigned into the names of the individual members
prior to Completion.
16 Insurance
---------
16.1 All assets (including Stock) of the Company of an insurable
nature are and have at all material times been insured.
16.2 All premiums due in relation to the Company's insurances
have been paid, and, so far as the First Vendor is aware (having
also made enquiry of its insurance brokers, Willis Corroon and of
AON CIA), the Company has not done or omitted to do or suffered
anything to be done or not to be done which would make any policy
of insurance of the Company void or voidable or which will or is
likely to result in a substantial increase in premium or which
would or is likely to release any insurer from any of its
obligations under any policy of insurance of the Company.
16.3 There is no material insurance claim pending or outstanding
and, so far as the First Vendor is aware, (having also made
enquiry of its insurance brokers, Willis Corroon and of AON CIA),
there are no circumstances likely to give rise to any such claim.
16.4 Adequate particulars of all the Company's insurances (and
of insurances effected by any other member of the Vendor's Group
in relation to the Company or its assets) are given in the
Original Disclosure Letter.
17 Financing
---------
17.1 The details contained in the Original Disclosure Letter of the
credit or debit balances on all the bank or deposit accounts of
the Company were correct at the date stated in the Original
Disclosure Letter and since such date there have been no material
payments out of any such accounts except for routine payments in
the ordinary course of business.
17.2 The Company has not applied for or received any grant, subsidy,
payment or allowance from any government, authority, body or
agency (whether supra-national, national, regional or local)
which may at any time be or become repaid or repayable.
85<PAGE>
18 Contracts
---------
18.1 The Company is not a party to any Contract which:-
18.1.1 involves agency, distributorship, franchising;
18.1.2 involves marketing rights, information sharing,
manufacturing rights, servicing or maintenance which
involve payments or receipts by the Company exceeding
(BT.PD)100,000 over a 12 month period;
18.1.3 involves partnership, joint venture, or consortium
arrangements;
18.1.4 involves hire purchase, conditional sale, credit sale
(except in relation to Stock or other stock in trade),
leasing, or hiring arrangements which involve payments or
receipts by the Company exceeding (BT.PD)100,000 over a 12 month
period;
18.1.5 commits the Company to capital expenditure of an amount
in each individual case in excess of (BT.PD)50,000;
18.1.6 is for the supply of goods and/or services by or to the
Company on terms under which retrospective or future
discounts, price reductions or other material financial
incentives are given by or to the Company dependent on the
level of purchases or any other factor (save to the usual
extent in the normal course of the Company's business)
which involve payments or receipts by the Company exceeding
(BT.PD)100,000 over a 12 month period;
18.1.7 involves warranties, indemnities or representations
given in connection with a sale of shares or business and
assets, or is a guarantee or indemnity in respect of the
obligations of a third party, under which any material
liability or contingent liability is outstanding which
involve payments or receipts by the Company exceeding
(BT.PD)100,000 over a 12 month period;
18.1.8 involves the Company in any residual liability in
respect of any leasehold property at any time assigned or
otherwise disposed of by it and which are liabilities are
not provided in the Accounts;
18.1.9 is not on arm's length terms or is in any way otherwise
than in the ordinary course of the Company's business.
18.2 Neither the Company nor so far as the First Vendor is aware any
party with whom the Company has entered into any agreement or
contract is in default in relation to such agreement or contract
being a default which will have a material and adverse effect on
the financial or trading position or prospects of the Company and
so far as the First Vendor is aware there are no circumstances
likely to give rise to such a default.
86<PAGE>
18.3 No breach of contract has been notified to the Company in writing
and so far as the First Vendor is aware no breach of contract has
been notified orally which would entitle any third party to
terminate any contract to which the Company is a party or to call
in any money before the date on which payment thereof would
normally or otherwise be due and the Company has not received
written notice of intention to terminate any of such agreements
or contracts.
18.4 So far as the First Vendor is aware there is no reason to believe
that any customer or supplier of the Company or other person
dealing with the Company will refuse to continue to deal with the
Company or the First Purchaser or will deal with the Company on a
smaller scale than at present as a result of the change of
control of the Company to be effected pursuant to this Agreement.
18.5 There are no amounts exceeding (BT.PD)120,000 which are owing or which
could be owed by the Company in respect of deferred payment
obligations in connection with any previous acquisitions of the
share capital or of the business and assets of companies and all
amounts which are owing or which could be owed by the Company in
this respect have been properly provided for in the Accounts.
18.6 No amounts in excess of (BT.PD)600,000 in aggregate are held by way of
retention by customers of the Company and there are no
circumstances known to the First Vendor that would lead to such
retentions not being released in the ordinary course of business.
18.7 All rebates paid or payable by the Company pursuant to Contracts
with its customers (written or otherwise) have been properly made
pursuant to proper and lawful arrangements.
18.8 Firth Carpets Limited is not in breach of its obligations
pursuant to its contract with British Airways.
19 Other business matters
----------------------
19.1 During the 6 months ended on the date of this Agreement there has
been no substantial change in the basis or terms on which any
person is prepared to do business with the Company (apart from
price changes), and to the First Vendor's knowledge, no
substantial customer or supplier of the Company has ceased or
substantially reduced its business with the Company.
19.2 There is attached to the Original Disclosure Letter a copy of the
standard terms and conditions upon which the Company currently
buys, sells and supplies goods and services.
19.3 The Company is not a member of any trade association, society or
collective purchasing group .
19.4 The Company has not given any guarantee or warranty or made any
representation in respect of goods or services supplied or
contracted to be supplied by it save for any guarantee or
warranty implied by law and (save as aforesaid) has not accepted
on a legally binding basis any liability or obligation in respect
of any goods or services that would apply after any such goods or
services have been supplied by it.
87<PAGE>
19.5 The Company has not entered into an agreement or arrangement with
a customer or supplier on terms materially different to the
standard terms and conditions upon which the Company currently
buys, sells and supplies goods and services.
19.6 The Company is not restricted by contract from carrying on any
activity in any part of the world.
19.7 Other than in the ordinary course of business no offer is
outstanding which is capable of being converted into an
obligation of the Company by an acceptance or other act of some
other person.
COMPLIANCE; DISPUTES
--------------------
20 General Compliance
------------------
20.1 Compliance has been made in all material respects with all
legal requirements in connection with the formation of the
Company and all issues and grants of shares or other securities
of the Company.
20.2 The copy of the memorandum and articles of association of
the Company enclosed with the Original Disclosure Letter is true
and complete and up to date.
20.3 Compliance has been made in all material respects with the
filing of all returns, particulars, resolutions and other
documents required to be filed with or delivered to the Registrar
of Companies by the Company, and none has been so filed or
delivered within 14 days of the date of this Agreement.
20.4 The statutory books (including all registers and minute
books) of the Company are correct.
20.5 So far as the First Vendor is aware (having made enquiry of
its English Solicitors, Eversheds) , there is not pending, or in
existence, any investigation or enquiry by, or on behalf of, any
governmental or other body in respect of the affairs of the
Company.
20.6 The Company has conducted its business in all material
respects in accordance with all applicable laws (but excluding
Environmental Laws) and regulations of the United Kingdom and so
far as it is legally obliged to do so any other country in which
the Company does business or operates.
20.7 Save in respect of Environmental Authorisations and Intellectual
Property matters which are otherwise dealt with in this Schedule,
the Company has obtained all licences, permissions,
authorisations and consents legally required to own and operate
its assets and for the carrying on of its business (details of
which are set out in the Original Disclosure Letter). All such
licences, permissions, authorisations and consents are in full
force and effect. The Company is not in breach of any of the
material terms and conditions attached thereto and so far as the
Vendor is aware the Company has not been notified that any of
such licences, permissions, authorisations or consents may be
revoked or not renewed in the ordinary course of events.
88<PAGE>
21 Environmental matters
---------------------
21.1 Consents
--------
21.1.1 All Environmental Consents have been obtained and are
held in the name of the Company.
21.1.2 The Environmental Consents have been lawfully obtained,
are in full force and effect and copies are attached to the
Original Disclosure Letter.
21.1.3 The Company has complied in all material respects with
all conditions attaching to the Environmental Consents
(whether such conditions are imposed expressly or are
implied by law) and since 29th January 1996 the Company has
taken all reasonable steps to ensure that it is not and has
received no communication from any relevant authority that
it is in material breach of any such conditions.
21.1.4 There are no outstanding applications, appeals or other
proceedings in relation to the Environmental Consents.
21.1.5 So far as the First Vendor is aware the Company has not
received any notice, correspondence or other communication
in any other form which has not been satisfactorily dealt
with in respect of the Environmental Consents revoking
suspending or varying any of them.
21.2 Compliance with environmental protection laws
---------------------------------------------
21.2.1 So far as the First Vendor is aware neither the Company
nor any of its officers or employees have committed any
material breach of any Environmental Law.
21.2.2 So far as the First Vendor is aware the Company has not
received any notice or other communication from any
relevant authority which has not been satisfactorily dealt
with in respect of the Company's business or in relation to
any property at any time owned or occupied by the Company
alleging any breach of Environmental Law, or failure to
comply with which would constitute a breach of such laws or
imposing requirements compliance with which could be
secured by further proceedings and so far as the First
Vendor is aware no such notice or other communication is
pending or threatened.
89<PAGE>
21.2.3 In the last 2 years, no relevant authority has, in
relation to the property assets or business of the Company
and in relation to Environmental Law, exercised any powers
of entry, taken samples measurements or photographs,
removed dismantled or tested any substance article or
organism, required statements (signed or otherwise) from
any person in relation to any examination or
investigations, required any production of data or taken
any steps to seize and/or render harmless any substance
article or organism.
21.2.4 The Company has not received any complaint which has
not been satisfactorily dealt with from a third party
(including an employee) in respect of the Company's
business or in relation to any property at any time owned
or occupied by the Company alleging in either case any
breach of Environmental Law and so far as the First Vendor
is aware no such complaint is pending or threatened.
21.3 Civil Liability
---------------
21.3.1 So far as the First Vendor is aware the Company has not
received any notice or other communication which has not
been satisfactorily dealt with alleging any actual or
potential liability on the part of the Company under
Environmental Laws arising from any activities or
operations of the Company or the state or condition of any
properties now or formerly owned or occupied by the Company
or facilities now or formerly used by the Company.
21.3.2 The Company is not engaged in any litigation,
arbitration or dispute resolution proceedings relating to
any potential or actual liability in respect of any matter
covered by paragraph 21.3.1 and so far as the First Vendor
is aware no such litigation arbitration or dispute
resolution proceedings is pending or threatened.
21.4 Condition of sites properties or other land
-------------------------------------------
21.4.1 No written notice or other written communication (and
so far as the First Vendor is aware no other form of
communication) has been received by the Company from any
relevant authority requiring the remediation of any site
property or other land now or formerly owned occupied or
controlled by the Company or of any waters on, adjacent to,
underlying, or in the vicinity of such land or requiring
the payment of any sums in respect of such remediation.
21.5 Internal policy assessments and plans
-------------------------------------
21.5.1 Details of all the Company's statements of corporate
environmental policy and operating procedures are set out
in the Original Disclosure Letter (the "Policy
Statements").
21.5.2 The Company has used all reasonable endeavours to
comply with the Policy Statements.
90<PAGE>
21.6 Protest and Boycotts
--------------------
No protest boycott, demonstration, adverse publicly campaign or
other action in respect of matters relating to the Environment is
being or has been conducted or threatened by an non-governmental
organisation or pressure group in relation to the Company or its
business, products, operations or activities.
21.7 The warranties set out in 21.1 to 21.6 inclusive above (the
"Environmental Warranties") are the only warranties given in
respect of any matters concerning the Environment and each of the
other warranties shall be deemed not to be given in relation to
the Environment.
21.8 "relevant authority" means any Government, Government Agency,
local authority or any other person or entity having regulatory
authority under Environmental Law and/or any court of law or
tribunal, and in relation to private agreements includes any
person having powers under or in relation to that agreement.
22 Litigation
----------
22.1 The Company is not involved (save for debt collection by the
Company in the ordinary course of business) (whether as
plaintiff, defendant or any other party) in any civil, criminal,
tribunal or arbitration proceedings and so far as the First
Vendor is aware (having made enquiry of its English Solicitors,
Eversheds) no such proceedings are pending or threatened.
22.2 There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and the Company is not party to any
undertaking or assurance given to a court, tribunal or any other
person in connection with the determination or settlement of any
claim or proceedings.
22.3 No governmental or official investigation or inquiry concerning
the business or officers of the Company or any of its assets is
in progress or pending which has been notified to the Company in
writing and so far as the First Vendor is aware (having made
enquiry of its English Solicitors, Eversheds) there are no
circumstances which are likely to give rise to any such
proceedings investigations or inquiry.
22.4 There is not outstanding any liability for industrial training
levy or for any other statutory or governmental levy or charge.
23 Restrictive Agreements
----------------------
23.1 So far as the First Vendor is aware there are no agreements in
force restricting in any material respect the freedom of the
Company to provide and take goods and services by such means and
from and to such persons as it may from time to time think fit.
23.2 So far as the First Vendor is aware the Company is not nor has it
been party to any agreement, arrangement which:
91<PAGE>
23.2.1 is or ought to be or ought to have been or requires to
be registered under the Restrictive Trade Practices Acts
1976 and 1977 or contravenes the provisions of the Resale
Prices Act 1976 or is or has been the subject of any
inquiry, investigation or proceeding under any of these
Acts; or
23.2.2 infringes any competition, anti-restrictive trade
practice, anti-trust or consumer protection law or
legislation applicable in the United Kingdom or elsewhere
and not specifically mentioned in this paragraph.
23.3 The Company is not nor has it been party to any concerted
practice or deliberate course of conduct which:-
23.3.1 is or ought to be or ought to have been or requires to
be registered under the Restrictive Trade Practices Acts
1976 and 1977 or contravenes the provisions of the Resale
Prices Act 1976 or is or has been the subject of any
inquiry, investigation or proceeding under any of these
Acts; or
23.3.2 infringes any competition, anti-restrictive trade
practice, anti-trust or consumer protection law or
legislation applicable in the United Kingdom or elsewhere
and not specifically mentioned in this paragraph.
24 Insolvency
----------
24.1 No order has been made and no resolution has been passed and so
far as the First Vendor is aware no petition has been presented
for the winding-up of the Company, no administrative receiver,
receiver and/or manager has been appointed over the whole or any
part of the property of the Company, no administration order has
been made appointing an administrator in respect of the Company
and no petition has been presented for an administration order in
respect of the Company and no distress, execution or other
process has been levied on any of its assets which remains
unsatisfied; it has not suspended payment and is not insolvent or
unable to pay its debts as they fall due.
24.2 No voluntary arrangement has been approved under Part I
Insolvency Act 1986 and no compromise or arrangement has been
sanctioned under section 425 of the Act in respect of the
Company.
25 Events since the Accounting Date
--------------------------------
Since the Accounting Date:-
25.1 the Company has not acquired, or agreed to acquire any single
asset having a value in excess of (BT.PD)50,000 or assets having an
aggregate value in excess of (BT.PD)250,000;
25.2 the Company has not disposed of, or agreed to dispose of, any
business or asset other than finished goods having a value in
excess of (BT.PD)50,000;
92<PAGE>
25.3 the trade and business of the Company has been carried on in the
ordinary and normal course so as to maintain the same as a going
concern
25.4 no dividend has been declared, paid or made by the Company;
25.5 no resolution of the shareholders of the Company has been passed;
and
25.6 no management charge has become payable or been paid by the
Company.
25.7 there has not been any capitalisation of reserves of the Company
and the Company has not issued or agreed to issue any share or
loan capital other than that issued at the Accounting Date and
has not granted or agreed to grant any option in respect of any
share or loan capital and the Company has not repaid any loan
capital in whole or in part nor has it by reason of any default
by it in its obligations become bound or liable to be called upon
to repay prematurely any loan capital or borrowed monies;
25.8 the Company has paid its creditors in the ordinary course;
25.9 there has been no resolution of or agreement by the members of
the Company or any class thereof (except as provided in this
Agreement or with the prior written consent of the First
Purchaser) and in particular there has been no capital
reorganisation or other change in the capital structure of the
Company; and
25.10 no supplier to or customer of the Company who accounted for
more than 5 per cent of the Company's annual turnover in the last
financial year has ceased to trade with the Company or notified
the Company in writing of its intention to do so.
25.11 there has been no material deterioration in the financial or
trading position or prospects of the Company.
93<PAGE>
SCHEDULE 4
----------
Part 2
------
Dutch Non-Taxation Warranties
-----------------------------
1. INTERPRETATION
--------------
In this Part 2 of Schedule 4 the following expressions shall have
the following meanings unless inconsistent with the context:-
Expression Meaning
---------- -------
"the Accounting Date" 31 March 1997
"the Accounts" The audited Accounts of each Dutch
Group Member for the financial year
which ended on the Accounting Date,
comprising in each case the
audited balance sheet, the audited
profit and loss account notes and
directors and auditors report
"the Company" Notwithstanding the definitions
contained in Clause 1 each Company
individually details of which are
set out in Schedule 2 (but
excluding Vebe Floorcoverings GmbH)
shall be a Company as if the Dutch
Warranties were set out in full in
respect of each such company
provided that where used other than
in this Schedule 4 Part 2 and
Schedule 5 (Dutch Tax Warranties)
Company shall have the meaning
given in Clause 1
"Contract" Any oral or written legally binding
agreement, arrangement or
understanding
"Environment" means any air (including air within
natural or man-made structures
above or below ground), water
(including territorial, coastal and
inland waters, ground water and
water in drains and sewers) and
land (including the sea bed or
river bed under any water), surface
land and sub-surface land
94<PAGE>
"Environmental All or any permits, consents, licences,
Consents" registrations, approvals, certificates, and
other authorisations required under
Environmental Law and all terms and
conditions thereof required under any
Environmental Law for the operation
of the business of the Company at
the date of this Agreement
"Environmental Law" All or any Laws with regard to the pollution
or protection of the Environment or
the protection of the health and
welfare of humans and/or organisms
supported by the Environment from
harm resulting with or exposure to
Hazardous Substances
"Laws" All or any applicable law (whether
criminal, civil or administrative),
common law, judgment, court order,
statute, statutory instrument,
regulation, directive (to the
extent it has been implemented by
legislation), European Community
decision (insofar as legally
binding), bye-law, directly
applicable treaty, government
circular, code of practice and
guidance notes which are in force
at the date of this Agreement
"Stock" Stock
2 Disclosure of Information
-------------------------
2.1 The facts set out in the text of the Original Disclosure Letter
in relation to Part 2 of Schedule 4 (but for the avoidance of
doubt excluding the Disclosure Bundle as defined in the Original
Disclosure Letter and excluding any matters deemed to be
disclosed therein, including but not limited to paragraphs 1 to
11 therein) are true, complete and accurate in all respects and
not misleading.
3. Schedule 2 : Capital
--------------------
3.1 The information contained in Schedule 2 is accurate.
3.2 The Dutch Shares are the total issued and paid-up share capital
in the Dutch Company as set out in Schedule 2. No depository
95<PAGE>
receipts have been issued in respect of any such shares with the
co-operation of the Company. The Second Vendor has full right and
title to the Dutch Shares and each Company which is identified as
being the owner of the shares in each company set out in Schedule
2 has unchallenged legal title to those shares free from
Encumbrances and third party rights.
3.3 No Contract has been entered into and no proposal has been made
and no resolution has been adopted which requires or may require
the Company to allot or issue any share or loan capital or to
create any Encumbrance over any share or loan capital and no
claim has been made in writing to the First Vendor or, so far as
the First Vendor is aware, to the Company by any person to be
entitled to any such Contract.
3.4 The Company has no interest in the share capital of any corporate
body save as specified in Schedule 2.
3.5 The Company has neither issued any profit sharing certificates
("winstbewijzen") nor granted any other rights under its articles
of association to share in the profits ("statutaire
winstrechten") or the general reserves of the Company, nor any
other rights to third parties (including but not limited to
employees) entitling such third parties to share in the profits
or the general reserves of the Company.
3.6 No restrictions on the transfer of the shares
("blokkeringsbepalingen") other than those set forth in the
articles of association of the Company are in effect.
3.7 The authority to issue shares has not been delegated to any
corporate body of the Company.
3.8 The Dutch Company has a regional office in Malaysia and a
representative office in Shanghai details of which are set out in
the Original Disclosure Letter
4 Capacity of the Second Vendor
-----------------------------
4.1 The Second Vendor has full power to enter into and perform this
Agreement and the transaction and matters contemplated hereby,
and has taken all necessary action to authorise the entry into
and performance of this Agreement and the transactions and
matters hereby contemplated.
4.2 Each of the obligations expressed to be assumed by the Second
Vendor under this Agreement and any agreement hereby contemplated
constitutes a valid and binding obligation on the Second Vendor.
4.3 The execution and performance of this Agreement by the Second
Vendor is not prohibited or restricted by any provision of law or
any other matter and in particular but without limitation is not
subject to the approval or consent of any governmental authority
or regulatory body or otherwise, save for the approval of the
shareholders referred to in the condition in clause 6.1.
96<PAGE>
4.4 There is no litigation arbitration prosecution administrative or
other legal proceedings or dispute in existence or threatened
against the Second Vendor in respect of the Dutch Shares or the
Second Vendor's entitlement to dispose of the Dutch Shares and
there are no facts known to the Second Vendor which might give
rise to any such proceedings or any such dispute.
4.5 The Second Vendor has not received any notice or any application
or notice of any intended application under the provisions of any
rule of Netherlands Law disputing ownership to (or claiming any
legal rights relating to) any of the shares in any Dutch Group
Member
4.6 The Second Vendor has not exercised nor purported to exercise or
claim any lien over the Dutch Shares and no call on the Dutch
Shares is outstanding.
4.7 The Company has not at any time given any unlawful financial
assistance in connection with the purchase of shares as would
fall within the provisions of Article 2: 207c Dutch Civil Code.
5 Dormant Companies
-----------------
5.1 VEBE/Lenvinyl Holding BV, Lenvinyl BV, Vi-Backing BV and Visscher
& Beens Lenvinyl Verkoopmaatschappij BV are and have at
all times been dormant and such companies do not have
any outstanding liabilities in excess of guilders 2,700
in aggregate.
5.2 Exploitatiemij. Vebe Lenvinyl B.V., VEBE Tufting B.V., and
Monasch B.V. have been liquidated with effect from 19 December
1995 and these companies have no outstanding liability in excess
of guilders 2,700 in aggregate.
6 Accounts
--------
6.1 The Accounts:
6.1.1 give a true and fair view of the state of affairs of the
Company as at the Accounting Date or the date to which they
were drawn (as the case may be) and its profits for the
financial period ended on that date;
6.1.2 comply with the requirements of Dutch law and have been
drawn up in accordance with generally accepted Dutch
accounting principles; and
6.1.3 show a true and fair view of the state of affairs of the
Company as at the Accounting Date and of the profit or loss
of the Company for the financial year ended on that date.
6.2 Without limiting the generality of paragraph 6.1 above:
6.2.1 except as stated in the audited balance sheets and profit
and loss accounts of the Company for each of the last three
preceding financial years of the Company ended on the Accounting
Date no changes in the policies of accounting have been made
therein for any of those three financial years
97<PAGE>
6.2.2 the profits shown by the audited profit and loss accounts
of the Company for each of the last three preceding
financial years ended on the Accounting Date have not
(except as therein disclosed) been affected by any
extraordinary item or by any other factor rendering such
profits for all or any of such periods unusually high or
low;
6.2.3 no asset (whether fixed intangible investment or current)
has been revalued upwards in the Accounts and no intangible
asset has been brought into the Accounts;
6.4 The Management Accounts relating to the Dutch Group Members have
been carefully prepared in good faith on a basis consistent with
the previous monthly management accounts of the Company and are
not misleading.
6.5 All the accounts, books, registers, ledgers and financial and
other material records of whatsoever kind of the Company
(including all invoices and other records required for Dutch
Value Added Taxes ("BTW") and PAYE purposes) are up-to-date in
all material respects, in its possession or under its control and
have been fully properly and accurately kept and compiled in all
material respects.
7 Business Name
-------------
7.1 The Company does not use any name for any purpose other than its
full corporate name.
7.2 The Company does not use any trade names other than the Trade
Names in connection with its business.
ASSETS
------
8 Unencumbered Title
------------------
8.1 Each material asset (other than the Dutch Property) described and
included in the Accounts and/or in the books of account or
records of the Company (other than for Stock disposed of by the
Company in the ordinary course of its business since the
Accounting Date):
8.1.1 is in the legal and beneficial ownership of the Company ;
and
8.1.2 is in the possession or under the control of the Company in
the Netherlands;
8.1.3 is free from all Encumbrances and there is no agreement or
commitment to give or create, and no claim has been made in
writing to the First Vendor or to the Company that any
claim has been made by any person entitled to any
Encumbrance.
98<PAGE>
In this paragraph 8 "material asset" shall mean any asset having
a book value in excess of 15,000 Guilders
8.2 None of the material assets referred to in paragraph 8.1 are the
subject of any royalty, leasing or hiring agreement, hire
purchase agreement or, agreement for payment on deferred terms.
9 Debtors/Work in Progress
------------------------
9.1 The Company has not factored or discounted any debt or agreed to
do so.
9.2 The Company is not owed sums other than trade debts incurred in
the ordinary course of business.
10 Stock/Defective Products
------------------------
10.1 The stock now held by the Company and not written off or provided
for in part in the Completion Accounts:-
10.1.1 is not obsolete, slow moving, damaged or unsaleable;
and
10.1.2 of satisfactory quality.
10.2 No products manufactured or installed by the Company:-
10.2.1 are or are likely to become faulty or defective in any
respect;
10.2.2 fail to comply with any applicable Laws or regulations in
force when such products were manufactured; or
10.2.3 fail to comply with the terms of sale subject to which any
such products have been sold
and which in aggregate would lead to claims which are materially
different from claims which have arisen in the 12 months
preceding the date of Completion (including any such claims as
identified in the Disclosure Letter).
11 Plant etc.
----------
11.1 So far as the First Vendor is aware, the plant and machinery,
vehicles, fixtures and fittings, furniture, tools and other
equipment used in the business of the Company are in a reasonable
state of repair and condition having regard to their age and use
and are in adequate working order and none of such plant etc is
out of date or dangerous, or in need of renewal involving
expenditure in excess of three hundred thousand guilders or fails
to comply in all material respects with legally binding safety
standards.
99<PAGE>
11.2 The plant registers of the Company comprise in all material
respects a complete and accurate record of all material items of
plant, machinery, equipment and vehicles owned or used by the
Company (and for this purpose material item shall be one whose
value exceeds 15,000 guilders).
12 DUTCH PROPERTY
--------------
12.1 The particulars of the Dutch Property shown in Part 2 of Schedule
3 are correct.
12.2 The Company is not in occupation of nor entitled to any estate or
interest in any land or premises save for the Dutch Property.
12.3 The Dutch Property shown in part 2 of Schedule 3 comprises all
real property owned by the Dutch Company and Lenvinyl B.V.
12.4 The Dutch Property is not subject to any Encumbrances, easements
("erfdienstbaarheden") or to any other property rights or
interests of any other nature whatsoever.
12.5 None of the Dutch Property is subject to any lease agreement and
no purchase options, rights of first refusal or other preference
purchase rights have been granted in relation to the Dutch
Property.
12.6 Neither public nor private law prohibits or restricts the present
use of the Dutch Property.
12.7 No construction on or development of the Dutch Property has taken
place without the necessary permits or licences.
13 INTELLECTUAL PROPERTY RIGHTS
----------------------------
13.1 The Company has no interest in any Intellectual Property (whether
registered or not) save for the Intellectual Property details of
which (including ownership, and, in the case of registered
rights, registration, priority and renewal dates) are given in
the Original Disclosure Letter all of which are (where
applicable) registered solely in the name of the Company and are
beneficially owned by it with unencumbered title.
13.2 So far as the First Vendor is aware, the processes employed and
the products and services dealt in by the Company do not use,
embody or infringe any Intellectual Property vested in any other
person.
13.3 The Intellectual Property owned by the Company and which is
registered and referred to in the Original Disclosure Letter is
valid and subsisting so far as the First Vendor is aware the
Intellectual Property owned by the Company, which is not
registered and which is referred to in the Original Disclosure
Letter is valid and subsisting.
100<PAGE>
13.4 The First Vendor has not and nor has the Company received any
written indication that the Intellectual Property owned by the
Company and referred to in the Original Disclosure Letter is the
subject of any pending or threatened proceedings for opposition,
cancellation, revocation or rectification or claims by any person
(including without limitation any from employees, or former
employees of the Company) and so far as the First Vendor is aware
there are no matters or facts which will give rise to any such
proceedings or claims.
13.5 The Company has taken all steps reasonably necessary for the
maintenance of all the registered Intellectual Property owned by
the Company and referred to in the Original Disclosure Letter and
so far as the First Vendor is aware it has taken all steps
reasonably necessary for the maintenance of all unregistered
Intellectual Property owned by the Company and referred to in the
Original Disclosure Letter.
13.6 All application and renewal fees and costs and charges regarding
the Intellectual Property owned by the Company and referred to in
the Original Disclosure Letter due on or before Completion have
been duly paid in full.
13.7 The First Vendor has not and nor has the Company received any
written indication that any of the Intellectual Property owned by
the Company and referred to in the Original Disclosure Letter are
currently being infringed by any third party or have been so
infringed in the 12 month period preceding Completion and so far
as the First Vendor is aware no third party, is planning, or has
threatened, any such infringement.
13.8 Save for those agreements listed in the Original Disclosure
Letter the carrying on of the Company's business or businesses as
presently constituted does not require any licences or consents
from or the making of royalty or similar payments to any third
party which are material for the running of the Company's
business. So far as the Vendor is aware, the Company is not in
breach of any such listed agreements.
13.9 So far as the First Vendor is aware, there are no outstanding
claims which have been made against the Company for infringement
of any Intellectual Property used or which has been used by it
and no such claims have been settled by the giving of any
undertakings which remain in force.
13.10 So far as the First Vendor is aware, the Company is not
passing off any part of its business as and for the business of
any other person and the First Vendor has not and nor has the
Company been notified in writing that any person is passing off
its business as and for any part of the Company's business.
13.11 The Company has not entered into any Contract relating to
the licensing or use (by it or any other person) of any
Intellectual Property (other than confidentiality agreements in
the ordinary course of business).
101<PAGE>
13.12 CONFIDENTIAL INFORMATION
------------------------
13.12.1 So far as the First Vendor is aware, the Company does
not use any processes and is not engaged in any activities
which involve the misuse of any confidential information
belonging to any third party nor has the Company been
notified of any alleged misuse of such by it.
13.12.2 So far as the First Vendor is aware, the Company has
not been notified that any person has or is alleged to
have misused any of its Confidential Information.
13.12.3 The Company has not disclosed to any person any of its
Confidential Information except where such disclosure was
properly made in the normal course of the Company's
business or was required by law or contract.
13.13 COMPUTER SYSTEMS
----------------
13.13.1 All copies of computer programs used on the Computer
Systems (save for those described as owned by the Company
in the Original Disclosure Letter) are used by the Company
under software licences granted to the Company by the
persons claiming to be the owners or licensees of the
intellectual property in those computer programs. The
Company has not received notice of termination of any
software licence in respect of those computer programs.
13.13.2 The computer maintenance contracts specified in the
Original Disclosure Letter are current and the Company has
the benefit of those computer maintenance contracts. The
Computer Systems are in all material respects being
maintained to the Company's satisfaction under those
maintenance contracts and the Company has no cause to
terminate any computer maintenance contract nor are there
any disputes under those maintenance contracts.
13.13.3 The Company is registered under the Wet Persoonsregistratie
for all classes of data stored on the Computer Systems and
for all uses or disclosure of that data made by it. The
Company is not the subject of any complaint or proceedings
under the Wet Persoonsregistratie
13.13.4 The hardware comprised in the Computer System is owned by
the Company and is free of any security interest or other
encumbrance in favour of a third party.
13.13.5 The Company's disaster recovery planning is detailed in the
Original Disclosure Letter with respect to the Computer
Systems
13.13.6 The Company has sufficient technically competent and
trained employees to ensure the proper operation,
monitoring, use and security of the Computer Systems.
102<PAGE>
13.13.7 The Company has procedures, in accordance with good
industry practice, to ensure internal and external security
of the Computer Systems including procedure for taking and
storing, on-site and off-site, back-up copies of computer
programs and data
13.13.8 The Company's Computer Systems are capable, within a period
of one year from Completion, (of being made to be or being
replaced with a system which is) millennium compliant in
that the advent of the 21st Century (that is, the
commencement of years prefixed by "20" as opposed to
("19")) will not affect the performance of the Computer
Systems. The Original Disclosure Letter contains a summary
of the Company's policy on millennium compliance.
13.13.9 So far as the First Vendor is aware, all computer software
or hardware procurement projects, whether or not these
have been specified or mentioned in the Original Disclosure
Letter ("the IT Projects") are:
13.13.9.1 proceeding according to the timescales determined
by the Company for completion of each IT Project;
and
13.13.9.2 within the budget allocated by the Company for
each IT Project.
14 EMPLOYMENT
---------
14.1 All material particulars of the identities, dates of commencement
of employment (or appointment to office) and terms and
conditions of employment (including remuneration and any bonus,
commission, share incentives or profit sharing arrangement) of
all the employees and officers of the Company are enclosed with
the Original Disclosure Letter.
14.2 No material change has been made since the Accounting Date in
terms of employment of any Senior Employee or in the terms of
employment of any of the other employees at large which taken as
a whole would constitute a material change at the date of this
Agreement, and the Company is not party to any Contract to make
any such change.
14.3 There are no amounts owing to any present or former officers or
employees of the Company other than remuneration accrued (but
not yet due for payment) in respect of the calender month in
which this Agreement is executed, or reimbursement of business
expenses incurred during such month, and none of them is entitled
to accrued holiday payment other than in respect of the Company's
current holiday year or in respect of any holiday entitlement
carried forward from the immediately preceding holiday year.
14.4 No Senior Employee has been engaged by the Company since the
Accounting Date and no Senior Employee at or since the Accounting
Date has ceased, or given or received notice to cease to be so
employed or will be legally entitled to give notice as a result
of the provisions of this Agreement.
103<PAGE>
14.5 The Company has maintained adequate records regarding the service
of each of its employees (and so far as relevant to each of its
former employees) and complied in all material respects with all
agreements for the time being relating to them and has in the
last 9 months complied in all material respects with all legally
binding obligations imposed on it by Articles of the Treaty of
Rome, European Commission Regulations and Directives and all
statutes regulations and legally binding codes of conduct
relevant to the relations between it and its employees or it and
any employee representatives and has in the last 9 months
complied in all material respects with all relevant orders and
awards made under any statute affecting the conditions of service
of its employees or former employees.
14.6 Save for the Collective Labour Agreement for the Textile Industry
("CAO") and Secondary Labour Conditions ("secondaire
abeidsvoorwaarden") there are no agreements or other arrangements
(whether or not legally binding) between the Company and any
trade union or other body representing employees.
14.7 The Company has not introduced any short time working scheme or
any redundancy scheme under which payments greater than those
required by statute are payable.
14.8 The Company is not involved in any disputes and so far as the
First Vendor is aware there are no circumstances which may result
in any dispute involving any of the officers or employees or
former employees of the Company.
14.9 No monies or benefits other than in respect of contractual
emoluments are payable to any of the officers or employees of the
Company and so far as the First Vendor is aware there is not at
present a claim occurrence or state of affairs which is likely
hereafter to give rise to a claim against the Company arising out
of the employment or termination of employment of any employee or
former employee for compensation for loss of office or employment
pursuant to any rule of Netherlands Law.
14.10 In relation to each of the present officers or employees of
the Company (and so far as relevant to each of its former
employees) the Company has complied with all collective
agreements.
14.11 No agent engaged by the Company whose engagement is not subject
to a written contract has been engaged on terms which are
materially different to those of any other agent engaged by the
Company and in particular (but without limitation) no such agent
is entitled to a payment on termination of his agency which
exceeds the average annual commission received by that agent
calculated as an average of the previous five year's payments.
14.12 INTENTIONALLY DELETED.
104<PAGE>
14.13 No commissions are outstanding beyond the Company's contractual
payment terms with such agents and so far as the First Vendor is
aware there are no current disputes in relation to commissions
payable in respect of any agency agreement (whether written or
not) entered into by the Company.
14.14 All rebates paid or payable by the Company pursuant to
arrangements or contracts with its customers (written or
otherwise) have been properly made pursuant to proper and lawful
arrangements.
14.15 So far as the First Vendor is aware, no commercial agent has been
engaged by the Company on terms that that agent is granted
exclusive agency rights in relation to a particular territory in
respect of which (or part of which) the Company has granted
agency rights (whether or not exclusive) to another agent.
15 PENSIONS
--------
15.1 Save for the pension scheme operated by the Dutch Group ("the
Scheme") the Company is not party to, or has no legal liability
or obligation to make any ex-gratia arrangement or promise to pay
pensions, gratuities, superannuation allowances or the like or
otherwise to provide benefits to or for any of its past or
present officers or employees or their dependants; and there are
no retirement, pension or death benefit (or similar) schemes or
arrangements in relation to, or binding on, the Company.
15.2 Full particulars of the Scheme are contained in or annexed to the
Original Disclosure Letter including funding arrangements and
current membership.
15.3 So far as the First Vendor is aware, the policies under the
Scheme are sufficient to satisfy the liabilities and obligations
(both current and future) which the Company owes towards any or
all of its officers and employees at the date thereof.
15.4 So far as the First Vendor is aware, all pension arrangements of
the Company currently in force have been properly set up and
operated to date and do not give rise to any under-funding
whereby employees' pension entitlements (including any back
service obligations) are not fully provided for.
16 INSURANCE
---------
16.1 All assets (including Stock) of the Company of an insurable
nature are and have at all material times been insured.
16.2 All premiums due in relation to the Company's insurances have
been paid, and, so far as the First Vendor is aware (having made
enquiry of its insurance brokers), the Company has not done or
omitted to do or suffered anything to be done or not to be done
which would make any policy of insurance of the Company void or
voidable or which will or is likely to result in a substantial
increase in premium or which would or is likely to release any
insurer from any of its obligations under any policy of insurance
of the Company.
105<PAGE>
16.3 There is no material insurance claim pending or outstanding and,
sofar as the First Vendor is aware (having made enquiry of its
insurance brokers), there are no circumstances likely to give
rise to any such claim.
16.4 Adequate particulars of all the Company's insurances (and of
insurances effected by any other member of the Vendor's Group in
relation to the Company or its assets) are given in the Original
Disclosure Letter.
16.5 In the opinion of the First Vendor, adequate measures have been
taken to remedy all material issues identified as health and
safety concerns in Willis Corroon North Limited's Risk Management
Programme disclosed to the Second Purchaser.
17 FINANCING
---------
17.1 The details contained in the Original Disclosure Letter of the
credit or debit balances of all the bank or deposit accounts of
the Company were correct at the date stated in the Original
Disclosure Letter and since such date there have been no material
payments out of any such accounts other than for routine payments
in the ordinary course of business.
17.2 The Company has not applied for or received any grant, subsidy,
payment or allowance from any government authority, body or
agency (whether supra-national, national, regional or local)
which may at any time have to be or may become repaid or
repayable.
18 CONTRACTS
---------
18.1 The Company is not a party to any Contract which:-
18.1.1 involves agency, distributorship, franchising;
18.1.2 involves marketing rights, information sharing,
manufacturing rights, servicing or maintenance which
involve payments or receipts by the Company exceeding NLG
300 000 over a 12 month period;
18.1.3 involves partnership, joint venture, or consortium
arrangements;
18.1.4 involves hire purchase, conditional sale, credit sale
(except in relation to Stock or other stock-in-trade),
leasing or hiring arrangements which involve payments or
receipts by the Company exceeding NLG 300 000 over a 12
month period;
18.1.5 commits the Company to capital expenditure of an amount
in each individual case in excess of NLG 150,000;
18.1.6 is for the supply of goods and/or services by or to the
Company on terms under which retrospective or future
discounts, price reductions or other material
106
<PAGE>
financial incentives are given by or to the Company
dependent on the level of purchases or any other factor
(save to the usual extent in the normal course of the
Company's business) which involve payments or receipts by
the Company exceeding NLG 300 000 over a 12 month period;
18.1.7 involves warranties, indemnities or representations
given in connection with a sale of shares or business and
assets, or is a guarantee or indemnity in respect of the
obligations of a third party, under which any material
liability or contingent liability is outstanding which
involve payments or receipts by the Company exceeding NLG
300 000 over a 12 month period;
18.1.8 is not on an arm's length terms or is in any way
otherwise than in the ordinary course of the Company's
business.
18.2 Neither the Company nor so far as the First Vendor is aware any
party with whom the Company has entered into any agreement or
contract is in default in relation to such agreement or contract
being a default which will have a material and adverse effect on
the financial or trading position or prospects of the Company and
so far as the First Vendor is aware there are no circumstances
likely to give rise to such a default.
18.3 No breach of contract has been notified to the Company in writing
and so far as the First Vendor is aware no breach of contract has
been notified orally which would entitle any third party to
terminate any contract to which the Company is a party or to call
in any money before the date on which payment thereof would
normally or otherwise be due and the Company has not received
notice of intention to terminate any of such agreements or
contracts.
18.4 So far as the First Vendor is aware there is no reason to believe
that any customer or supplier of the Company or other person
dealing with the Company will refuse to continue to deal with the
Company or the First Purchaser or will deal with the Company on a
smaller scale than at present as a result of the change of
control of the Company to be effected pursuant to this Agreement.
19 OTHER BUSINESS MATTERS
----------------------
19.1 During the six months ended on the date of this Agreement there
has been no substantial change in the basis or terms on which any
person is prepared to do business with the Company (other than
price changes), and no substantial customer or supplier of the
Company has ceased or substantially reduced its business with the
Company.
19.2 There is attached to the Original Disclosure Letter a copy of the
standard terms and conditions upon which the Company currently
buys, sells and supplies goods and services.
19.3 The Company is not a member of any trade association, society or
collective purchasing group.
19.4 The Company has not given any guarantee or warranty or made any
representation in respect of goods or services supplied or
contracted to be supplied by it save for any guarantee or
107
<PAGE>
warranty implied by law and (save as aforesaid) has not
accepted on a legally binding basis any liability or obligation
in respect of any goods or services that would apply after any
such goods or services have been supplied by it.
19.5 The Company has not entered into an agreement or arrangement with
a customer or supplier on terms materially different to the
standard terms and conditions upon which the Company currently
buys, sells and supplies goods and services.
19.6 The Company is not restricted by contract from carrying on any
activity in any part of the world.
19.7 Other than in the ordinary course of business no offer is
outstanding which is capable of being converted into an
obligation of the Company by an acceptance or other act of some
other person.
COMPLIANCE DISPUTES
- -------------------
20 GENERAL COMPLIANCE
------------------
20.1 So far as the First Vendor is aware compliance has been made in
all material respects with all legal requirements in connection
with the formation of the Company and all issues and grants of
shares or other securities of the Company.
20.2 The only Managing Directors ("bestuurders") of the Company are
those persons whose names are listed in Schedule 2, Part 2.
20.3 The copy of the Articles of Association ("Statuten") of the
Company attached to the Original Disclosure Letter is accurate
and complete and up to date.
20.4 The Shareholders' Register and any required statutory books of
the Company have been properly kept and contain an accurate and
complete record of the matters with which they should deal.
20.5 All returns, particulars, resolutions and documents required by
Dutch law to be filed with the Chamber of Commerce (whether by
the Dutch Civil Code or by any other legislation) in respect of
the Company have been duly filed and are and were correct.
20.6 So far as the First Vendor is aware, there is not pending or in
existence, any investigation or enquiry by, or on behalf of, any
governmental or other body in respect of the affairs of the
Company.
20.7 The Company has conducted its business in all material respects
in accordance with all applicable Laws (but excluding
Environmental Laws which are dealt with elsewhere in this
Schedule) and regulations of the Netherlands and so far as it is
legally obliged to do so any other country in which the Company
does business or operates.
20.8 Save in respect of Environmental Authorisations and Intellectual
Property matters which are otherwise dealt with in this Schedule,
the Company has obtained all licences, permissions,
108
<PAGE>
authorisations and consents legally required to own and operate
its assets and for the carrying on of its business (details of
which are set out in the Original Disclosure Letter). All such
licences, permissions, authorisations and consents are in full
force and effect. The Company is not in material breach of any
terms and conditions attached thereto and so far as the First
Vendor is aware the Company has not been notified that any of
such licences, permissions, authorisations or consents may be
revoked or not renewed in the ordinary course of events
21 ENVIRONMENTAL MATTERS
---------------------
21.1 Consents
--------
21.1.1 All Environmental Consents have been obtained and are
held in the name of the Company.
21.1.2 The Environmental Consents have been lawfully obtained,
are in full force and effect and copies are attached to the
Original Disclosure Letter.
21.1.3 The Company has complied in all material respects with
all conditions attaching to the Environmental Consents
(whether such conditions are imposed expressly or are
implied by law).
21.1.4 There are no outstanding applications, appeals or other
proceedings in relation to the Environmental Consents.
21.1.5 So far as the First Vendor is aware the Company has not
received any notice, correspondence or other communication
in any other form which has not been satisfactorily dealt
with in respect of the Environmental Consents revoking
suspending or varying any of them.
21.2 Compliance with environmental protection laws
---------------------------------------------
21.2.1 So far as the First Vendor is aware neither the Company
nor any of its officers or employees have committed any
material breach of any Environmental Law.
21.2.2 So far as the First Vendor is aware the Company has not
received any notice or other communication from any
relevant authority which has not been satisfactorily dealt
with in respect of the Company's business or in relation to
any property at any time owned or occupied by the Company
alleging any breach of Environmental Law, or failure to
comply with which would constitute a breach of such laws or
imposing requirements compliance with which could be
secured by further proceedings and so far as the First
Vendor is aware no such notice or other communication is
pending or threatened.
21.2.3 In the last 2 years, no relevant authority has, in
relation to the property assets or business of the Company
and in relation to Environmental Law, exercised any powers
of entry, taken samples measurements or photographs,
removed dismantled or tested any substance article or
organism, required statements (signed or otherwise) from
109
<PAGE>
any person in relation to any examination or
investigations, required any production of data or taken
any steps to seize and/or render harmless any substance
article or organism.
21.2.4 The Company has not received any complaint which has
not been satisfactorily dealt with from a third party
(including an employee) in respect of the company's
business or in relation to any property at any time owned
or occupied by the Company alleging in either case any
breach of Environmental Law and so far as the First Vendor
is aware no such complaint is pending or threatened.
21.3 Civil Liability
---------------
21.3.1 So far as the First Vendor is aware the Company has not
received any notice or other communication which has not
been satisfactorily dealt with alleging any actual or
potential liability on the part of the Company under
Environmental Laws arising from any activities or
operations of the Company or the state or condition of any
properties now or formerly owned or occupied by the Company
or facilities now or formerly used by the Company.
21.3.2 The Company is not engaged in any litigation,
arbitration or dispute resolution proceedings relating to
any potential or actual liability in respect of any matter
covered by paragraph 21.3.1 and so far as the First Vendor
is aware no such litigation arbitration or dispute
resolution proceedings is pending or threatened.
21.4 Condition of sites properties or other land
-------------------------------------------
21.4.1 No written notice or other written communication (and
so far as the First Vendor is aware no other form of
communication) has been received by the Company from any
relevant authority requiring the remediation of any site
property or other land now or formerly owned occupied or
controlled by the Company or of any waters on, adjacent to,
underlying, or in the vicinity of such land or requiring
the payment of any sums in respect of such remediation.
21.5 Internal policy assessments and plans
-------------------------------------
21.5.1 Details of all the Company's statements of corporate
environmental policy and operating procedures are set out
in the Original Disclosure Letter (the "Policy
Statements").
21.5.2 The Company has used all reasonable endeavours to
comply with the Policy Statements.
21.6 Protest and Boycotts
--------------------
No protest boycott, demonstration, adverse publicly campaign or
other action in respect of matters relating to the Environment is
being or has been conducted or threatened by an non-governmental
organisation or pressure group in relation to the Company or its
business, products, operations or activities.
110<PAGE>
21.7 The warranties set out in 21.1 to 21.6 inclusive above (the
"Environmental Warranties") are the only warranties given in
respect of any matters concerning the Environment and each of the
other warranties shall be deemed not to be given in relation to
the Environment.
21.8 "relevant authority" means any Government, Government Agency,
local authority or any other person or entity having regulatory
authority under Environmental Law and/or any court of law or
tribunal, and in relation to private agreements includes any
person having powers under or in relation to that agreement.
22 LITIGATION
----------
22.1 The Company is not involved (save for debt collection by the
Company in the ordinary course of business) (whether as
plaintiff, defendant or any other party (including arbitration
proceedings or "bindend advies" proceedings)) in any civil,
criminal, tribunal or arbitration proceedings and so far as the
First Vendor is aware (having made enquiry of its Dutch legal
advisers, Boekel de Neree) no such proceedings are pending or
threatened.
22.2 There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and the Company is not party to any
undertaking or assurance given to a court, tribunal or any other
person in connection with the determination or settlement of any
claim or proceedings.
22.3 No governmental or official investigation or inquiry concerning
the business or officers of the Company or any of its assets is
in progress or pending which so far as the First Vendor is aware
has been notified to the Company in writing and so far as the
First Vendor is aware (having made enquiry of its Dutch legal
advisers, Boekel de Neree) there are no circumstances which are
likely to give rise to any such proceedings investigations or
inquiry.
22.4 There is not outstanding any liability for industrial training
levy or for any other statutory or governmental levy or charge.
23 RESTRICTIVE AGREEMENTS
----------------------
23.1 So far as the First Vendor is aware there are no agreements in
force restricting in any material respect the freedom of the
Company to provide and take goods and services by such means and
from and to such persons as it may from time to time think fit.
23.2 So far as the First Vendor is aware the Company is not nor has it
been party to any agreement, arrangement which:
23.2.1 is or ought to be or ought to have been or requires to
be registered under or contravenes the provisions of any
rule of Netherlands law or is or has been the subject of
any inquiry, investigation or proceeding under any rule of
Netherlands law; or
111<PAGE>
23.2.2 infringes any competition, anti-restrictive trade
practice, anti-trust or consumer protection law or
legislation applicable in the Netherlands or elsewhere
and not specifically mentioned in this paragraph.
23.3 The Company is not nor has it been party to any concerted
practice or deliberate course of conduct which:-
23.3.1 is or ought to be or ought to have been or requires to
be registered under the Restrictive Trade Practices Acts
1976 and 1977 or contravenes the provisions of the Resale
Prices Act 1976 or is or has been the subject of any
inquiry, investigation or proceeding under any of these
Acts; or
23.3.2 infringes any competition, anti-restrictive trade
practice, anti-trust or consumer protection law or
legislation applicable in the United Kingdom or elsewhere
and not specifically mentioned in this paragraph.
24 INSOLVENCY
----------
No order has been made and no resolution has been passed and so
far as the First Vendor is aware, no petition has been
presented, for the bankruptcy or winding-up of the Company or
granting of a moratorium of payments to it and, no administrative
receiver, receiver and/or manager has been appointed over the
whole or any part of the property of the Company and no distress,
execution or other process has been levied on any of its assets
which remains unsatisfied and the Company is not insolvent or
unable to pay its debts as they fall due.
25 EVENTS SINCE THE ACCOUNTING DATE
--------------------------------
Since the Accounting Date:-
25.1 the Company has not acquired, or agreed to acquire any any
single asset having a value in excess of NLG 150,000 or assets
having an aggregate value in excess of NLG750,000;
25.2 the Company has not disposed of, or agreed to dispose of, any
business or asset other than finished goods having a value in
excess of NLG 150,000;
25.3 the trade and business of the Company has been carried on in the
ordinary and normal course so as to maintain the same as a going
concern;
25.4 no dividend has been declared, paid or made by the Company;
25.5 no management charge has become payable or been paid by the
Company.
25.7 there has not been any capitalisation of reserves of the Company
and the Company has not issued or agreed to issue any share or
loan capital other than that issued at the Accounting Date and
has not granted or agreed to grant any option in respect of any
112<PAGE>
share or loan capital and the Company has not repaid any loan
capital in whole or in part nor has it by reason of any default
by it in its obligations become bound or liable to be called upon
to repay prematurely any loan capital or borrowed monies;
25.8 the Company has paid its creditors in the ordinary course of
business;
25.9 there has been no resolution of or agreement by the members of
the Company or any class thereof (except as provided in this
Agreement or with the prior written consent of the Second
Purchaser) and in particular there has been no capital
reorganisation or other change in the capital structure of the
Company;
25.10 no supplier to or customer of the Company who accounted for
more than 5 per cent of the Company's annual turnover in the last
financial year has ceased to trade with the Company or notified
the Company in writing of its intention to do so; and
25.11 there has been no material deterioration in the financial
or trading position or prospects of the Company.
26 SER MERGER CODE AND WORKS COUNCIL ETC.
--------------------------------------
So far as the First Vendor is aware the Company has complied with
all obligations imposed upon it under the "Wet op de
Ondernemingsraden" ("Works Councils Act"), the "SER Fusiecode"
("SER Merger Code") and the applicable "Collectieve
Arbeidsovereenkomsten" ("Collective Labour Agreements") and there
are no outstanding obligations to be performed by it under such
SER Merger Code, Works Councils Act and/or Collective Labour
Agreements with respect to the change of ownership of the Company.
113
<PAGE>
SCHEDULE 4
----------
PART 3
------
GERMAN NON-TAXATION WARRANTIES
1. Interpretation
--------------
In this Part 3 of Schedule 4 the following expressions shall have
the following meanings unless inconsistent with the context:-
Expression Meaning
---------- -------
"the Accounting Date 31 March 1997
"the Accounts" The audited accounts of the Company
for the financial year which ended on
the Accounting Date, comprising a
balance sheet, a profit and loss
account, notes and directors' and
auditors' reports.
"Company" Notwithstanding the definitions
contained in clause 1 the Company
shall mean Vebe Floorcoverings
GmbH, provided that where used
other than in this Schedule 4 and
Schedule 5 Company shall have the
meaning given in clause 1
"Contract" Any oral or written legally binding
agreement, arrangement or
understanding.
1. The Company has been validly incorporated and VEBE Floorcoverings
B.V.'s share in stated capital of the Company has been fully
contributed. There are no obligations to contribute additional
capital and no liabilities due to an insufficient value of the
capital contributions made. The details of the Company set out in
Schedule 2 are correct.
2. VEBE Floorcoverings B.V. holds valid and unchallenged legal title
to all of the shares of the Company which are free and clear of
any encumbrances or rights of third parties.
3. The Articles of Association of the Company remain unchanged from
those attached to the Disclosure Bundle (as defined in the
Disclosure Letter).
4. The Company is not a party to agreements within the meaning of
Sections 291, 292 of the German Stock Corporation Act
(Aktiengesetz).
114
<PAGE>
5. The Accounts have been prepared in compliance with the
statutory provisions on the valuation and accounting of stock
corporations and in accordance with generally accepted German
accounting principles and show a true and fair view of the state
of affairs of the Company as at the Accounting Date and of the
profit or loss of the Company for the financial period ended on
that date.
6. Each material fixed and current asset (having a book value of DM
3,000 or more) ("Anlage- und Umlaufvermogen) shown in the balance
sheets in the Accounts as of the Accounting Date were on the
Accounting Date the unrestricted property of the Company without
being charged with any third party rights, (except for retentions
of title, chattel mortgages and statutory liens within the
ordinary course of business).
7. The Company has filed in a due and proper manner all tax returns
and declarations as to social security contributions relating to
sickness insurance funds due to be submitted by it prior to the
date of this Agreement.
8. No guarantees and bonds or other in-rem or in-personam
securities, except for customary performance securities and
warranty bonds in the ordinary course, have been granted by
third persons in favour of the Company nor by the latter in
favour of third persons (including the Vendors).
9. The Company has obtained all public law and private law licences
and permits legally required for its current business operation
as well as for its operational facilities, equipment and
buildings. No requirements and orders issued by the building
and trade inspection offices, have been issued in respect of the
Company or, so far as the First Vendor is aware, been threatened,
nor, so far as the First Vendor is aware, are any circumstances
known to the Company which may cause material financial
expenditure after the Accounting Date as a result of such
requirements or orders.
10. So far as the First Vendor is aware, the processes employed and
the products and services dealt in by the Company do not use,
embody or infringe any patents, trade marks, utility models or
other industrial property rights of third parties. No third
party has notified the Company in writing of any alleged
violation or assertion of other rights with respect to the
intellectual property rights used or filed by the Company for
registration and with respect to its know-how.
11. With the exception of contracts, obligations, registration or
application documents set forth in the Disclosure Bundle as
defined in and attached to the Disclosure Letter the Company has
no further rights and/or obligations arising out of the following
legal relationships and which are in the case of the arrangements
referred to in paragraphs 11.3 and 11.6 below material in the
context of the business of the Company:
11.1 patents, trade marks, other industrial property rights;
11.2 licence and know-how agreements, irrespective of whether the
Company is licensor or licensee;
115
<PAGE>
11.3 agreements with distributors, commercial agents, commercial
travellers on own account, commercial travellers or other
continuous contracts with third parties as subcontractors;
11.4 commitments to grant profit or turnover related remunerations;
11.5 contracts, commitments and agreement with respect to a company or
other old-age or health insurance scheme;
11.6 non-competition arrangements in favour or to the detriment of the
Company;
11.7 loan agreements as borrower or lender, save usual employer loans
and advances up to the amount of one monthly salary;
11.8 agreements containing a purchase or delivery obligation towards
suppliers and/or customers with a total turnover exceeding DM
100,000.-- p.a. for each contract partner;
11.9 employment contracts with an annual gross remuneration exceeding
DM 100,000.-- (including royalty etc.);
11.10 other contracts or obligations outside the ordinary course of
business of the Company leading to obligations exceeding DM
100,000.-- net p.a. in each individual case;
11.11 as recipient of public benefits, subsidies or other financial aid
the receipt or maintenance of which may be withdrawn following
Completion as a result of the change in ultimate ownership of the
Company.
12. The Company is not party to any legal or arbitration proceedings,
except for any debt collection matters by the Company the
dispute value of which in aggregate does not exceed DM 75,000.--,
nor has the Company been notified in writing that any such
proceedings are pending or threatened, So far as the First Vendor
is aware, there are also no circumstances likely to give rise to
any such proceedings.
13. The Company is not in default with the fulfilment of any private
and public-law obligations in any material respect. Upon
conclusion of this Agreement, the First Vendor is not aware of
any other special legal or actual circumstances which, singly or
jointly, already today give rise to the assumption that the
operation and the unrestricted continuation of the Company and
its profitability are persistently jeopardised.
14. EVENTS SINCE THE ACCOUNTING DATE
--------------------------------
Since the Accounting Date:-
14.1 the Company has not acquired, or agreed to acquire any single
asset having a value in excess of DM150,000 or assets having an
aggregate book value in excess of DM 750,000;
14.2 the Company has not disposed of, or agreed to dispose of, any
business or asset other than finished goods having a value in
excess of DM 150,000;
116<PAGE>
14.3 the trade and business of the Company has been carried on in the
ordinary and normal course so as to maintain the same as a going
concern;
14.4 no dividend has been declared, paid or made by the Company;
14.5 no resolution of the shareholders of the Company has been passed;
14.6 no management charge has become payable or been paid by the
Company;
14.7 there has not been any capitalisation of reserves of the Company
and the Company has not issued or agreed to issue any share or
loan capital other than that issued at the Accounting Date and
has not granted or agreed to grant any option in respect of any
share or loan capital and the Company has not repaid any loan
capital in whole or in part nor has it by reason of any default
by it in its obligations become bound or liable to be called upon
to repay prematurely any loan capital or borrowed monies;
14.8 the Company has paid its creditors in the ordinary course;
14.9 there has been no resolution of or agreement by the shareholders
of the Company or any class thereof (except as provided in this
Agreement or with the prior written consent of the Second
Purchaser) and in particular there has been no capital
reorganisation or other change in the capital structure of the
Company;
14.10 no supplier to or customer of the Company who accounted for more
than 5 per cent of the Company's annual turnover in the last
financial year has ceased to trade with the Company or notified
the Company in writing of its intention to do so; and
14.11 there has been no material deterioration in the financial or
trading position or prospects of the Company.
15 So far as the First Vendor is aware no commercial agent has been
engaged by the Company on terms that that agent is granted exclusive
agency rights in relation to a particular territory in respect of
which (or part of which) the Company has granted agency rights
(whether exclusive or not) to another agent.
117
<PAGE>
SCHEDULE 5
----------
Taxation
--------
PART 1 - INTERPRETATION
-----------------------
1 Interpretation
In this Schedule 5:-
1.1 the following expressions have the following meanings unless
inconsistent with the context:-
Expression Meaning
---------- -------
"the Accounting Date" 31 March 1997
"ACT" Advance corporation tax
"the Auditors" The auditors for the time being of the
Company
"the Balance Sheet" The balance sheet of the Company comprised
in the Completion Accounts
"CAA" Capital Allowances Act 1990 being legislation
in the United Kingdom
"CITA" Corporate Income Tax Act 1969, being
legislation in the Netherlands
"Claim" Any claim, notice, demand, assessment, letter
or other document issued, or action taken,
by or on behalf of any person or Taxation
Authority and the submission of any Taxation
form, return or computation from which, in
either case, it appears to the Purchasers
that the Company is or may be subject to a
Liability to Taxation or other liability
in respect of which the Covenantor is or
may be liable under this Schedule 5
"Company" Notwithstanding the definition contained
in Clause 2 of the Agreement:-
(a) In Parts 1, 2 and 3 and 4 of this
Schedule 5 each company individual
details of which are set out in
Schedule 1 and Schedule 2 as if the
118<PAGE>
provisions of this Schedule 5 were
set out in full in respect of each
such Company;
(b) In Part 6 of this Schedule 5 each
English Group Member
(c) In Part 7 of this Schedule 5 each
Dutch Group Member other than VEBE
Floorcoverings GmbH
PROVIDED THAT where used other than in
this Schedule 5 and Schedule 4 "Company"
shall have the meaning given in Clause 2
of this Agreement.
"Completion Accounts" The same meaning as in clause 1 of
Schedule 6
"Covenantor" Rex Plc
"Dispute" Any dispute, appeal,
negotiations or other proceedings in
connection with a Claim
"Event" Any event, fact or circumstance
whatsoever including but not limited to:-
(a) any transaction, action or omission
(whether or not the Company is
party to it);
(b) the earning, receipt or accrual for
any Taxation purpose of any income,
profits or gains;
(c) the incurring for any Taxation
purpose of any loss or expenditure;
(d) the declaration, payment or making
of any dividend or other
distribution;
(e) the sale and purchase of the Shares
pursuant to this Agreement; and
(f) Completion
"FA" Finance Act
119
<PAGE>
"Fiscal Unity" the meaning given to the expression
"Fiscale eenheid" by Article 15 CITA
"Future Relief" Any Relief which arises as a
result of any Event which has occurred or
occurs after Completion
"Group Relief" The meaning given to that expression by
section 402 ICTA
"ICTA" Income and Corporation Taxes Act 1988
being legislation in the United Kingdom
"IHTA" Inheritance Tax Act 1984 being
legislation in the United Kingdom
"Liability to Taxation" Any liability of the Company to make payment
or increased payment of Taxation (whether or
not the Company is primarily so liable and
whether or not the Company has any right of
recovery against any other person) and also;
(a) The loss, reduction or non-
availability, or the setting off
against income profits or gains
earned; accrued or received before
Completion or against a Liability
to Taxation arising before
Completion (where, but for such
setting off, the Company would have
had an actual Liability to Taxation
in respect of which the Purchaser
would have been able to make a
claim against the Covenantor under
this deed), of any Relief falling
within paragraph (b) of the
definition of "Purchaser's Relief".
(b) The loss of a right to a Purchaser's
Relief within paragraph (a) of the
definition of Purchaser's Relief,
or the setting-off of any such
Purchaser's Relief against an actual
Liability to Taxation in respect of
which the Purchaser would, but for
that setting-off, have been able to
make a claim against the Covenantor
under this deed; and
120
<PAGE>
(c) The setting-off against income,
profits or gains earned, accrued or
received before completion of any
Relief within paragraph (c) of the
definition of "Purchaser's Relief"
where, but for such setting-off, the
Company would have had an actual
Liability to Taxation in respect of
which the Purchaser would have been
able to make a claim against the
Covenantor under this deed.
(d) The Company's loss, reduction or
non-availability of a refund of
Taxation as a result of
compensation or offset against a
tax liability of the Second Vendor
after Completion under Article 24
under 2 of the Invarderingswet 1990
"Purchasers' Relief" (a) Any Relief which was taken into
account in computing (and so
reducing or eliminating) any
provision for deferred tax which
appears in the Balance Sheet or
which would have appeared in the
Balance Sheet but for the presumed
availability of such Relief; and
(b) Any Future Relief (other than a Relief
which arises as a result of a Liability
to Taxation in respect of which the
Covenantor has made a payment under
this Schedule 5 including for the
avoidance of doubt, a payment under
the Taxation warranties)
"Relief" (a) Any loss, relief, allowance, exemption,
set-off, deduction or credit available
from, against or in relation to
Taxation or in the computation for any
Taxation purpose of income, profits
or gains; and
(b) any right to a repayment of Taxation
"Repayment" The obtaining by the Company of:-
(a) a repayment of Taxation where the
Covenantor has made a payment under
121
<PAGE>
this Schedule 5, (including, for the
avoidance of doubt, a payment under
the Taxation Warranties), in respect
of the same Taxation which is the
subject of the repayment otherwise
than by the use of a Purchasers'
Relief; or
(b) the payment of any other amount
from any third party (other than a
Company, the Purchasers or any
member of the same group of
companies as the Purchasers) in
respect of a Liability to Taxation
or other liability including, for
the avoidance of doubt, a payment
under the Taxation Warranties, in
respect of which the Covenantor
has made a payment under this
Schedule 5
"Saving" (a) the reduction or elimination of any
liability of the Company or the
Purchasers or any member of the same
group of companies as the Purchasers
to make an actual payment of Taxation
in respect of which Taxation the
Covenantor would not have been liable
under this Schedule 5, by the use of
any Reliefs arising wholly as a result
of a Liability to Taxation or other
liability in respect of which the
Covenantor has made a payment under
this Schedule 5 including, for the
avoidance of doubt, a payment under
the Taxation Warranties
(b) the reduction or elimination of any
liability of the Company or the
Purchasers or any members of the
same group of companies as the
Purchasers to make an actual
payment of taxation as a result of
paragraph 16 of the Dutch Fiscal
Unity Standard Conditions
(published in the Decision of the
Underminister of Finance of 30
September 1991, number DB 91/2310,
stert 189)
"Taxation" (a) Any tax, duty, impost, levy or tariff
of a tax nature, past or present, of
the United Kingdom, the Netherlands or
elsewhere, whether governmental,
122<PAGE>
state, provincial, local
governmental or municipal,
including but not limited to income
tax (including income tax required
to be deducted or withheld from or
accounted for in respect of any
payment under section 203 ICTA or
otherwise), corporation tax, ACT,
Capital Tax, capital gains tax,
dividend withholding tax,
inheritance tax, VAT, customs and
other import or export duties,
rates, real estate tax, onroerende -
zaakbe1asting stamp duty, stamp
duty reserve tax, national
insurance and social security
contributions; and
(b) any fine, penalty, surcharge,
interest or other imposition
relating to any tax, duty, impost ,
levy or tariff mentioned in
paragraph (a) of this definition or
to any account, record, form,
return or computation required to
be kept, preserved, maintained or
submitted to any person for the
purposes of any such tax, duty,
impost or levy
"Taxation Authority" Any authority, whether of the United
Kingdom, the Netherlands or elsewhere,
competent to impose, assess or collect
Taxation, including but not limited to the
Board of Inland Revenue, the Commissioners
of Customs and Excise and the Department
of Social Security
"Taxation Statute" Any primary statute (and all regulations and
other documents having the force of law under
such statute) published, enacted, issued or coming
into force on or before the date of this
Agreement relating to Taxation including
for the avoidance of doubt any directive
or regulation adopted by the Council of
the European Union
"Taxation Warranties" The same meaning as in Clause 1 of the
Agreement
"TCGA" Taxation of Chargeable Gains Act
1992 being legislation in the United
Kingdom
123<PAGE>
"TMA" Taxes Management Act 1970
being legislation in the United Kingdom
"VAT" Value added tax
"VATA" Value Added Tax Act 1994 being
legislation in the United Kingdom
"VATA 1969" Value Added Tax Act 1969 being legislation
in the Netherlands
"Covenantor's Relief" Any Relief which is or subsequently
becomes available to the Company other
than a Purchasers' Relief.
1.2 references to Events include Events which are deemed to have
occurred for any Taxation purpose and references to Events which
have occurred at any particular time include Events which are
deemed to have occurred at any particular time and references to
income, profits or gains earned, received or accrued for any
Taxation purpose include income, profits or gains which are
deemed to have been earned, received or accrued for any Taxation
purpose (as opposed to any accounting purpose) and references to
income, profits or gains earned, received or accrued at any
particular time include income profits or gains which are deemed
to have been earned, received or accrued at any particular time;
1.3 references to any statute or statutory provisions will, unless
the context otherwise requires, be construed as including
references to any earlier statute or the corresponding provisions
of any earlier statute, whether repealed or not, directly or
indirectly amended, consolidated, extended or replaced by such
statute or provisions, and to any subsequent statute or the
corresponding provisions of any subsequent statute directly or
indirectly amending, consolidating, extending, replacing or
re-enacting the same, and will include any orders, regulations,
instruments or other subordinate legislation made under the
relevant statute or statutory provisions.
1.4 Any reference to an Event or the consequences of an Event
accruing on or before the Completion Date shall include the
combined effect of any two or more Events at least one of which
shall have taken place or be deemed for the purpose of any Tax to
have occurred on or before the Completion Date. PROVIDED THAT
the Event or Events occurring prior to Completion are outside the
ordinary course of business of the Company and the Event or
Events occurring after Completion are within the ordinary course
of business of the Company.
1.5 For the purposes of this schedule 5, when determining the
liability of the Covenantor in respect of any corporation tax
liability of the Company relating to the period from Accounts
Date to Completion the taxable profits of the Company shall be
calculated by reference to the accounting profits before tax of
the Company as determined by the Completion Accounts (or which
should properly have appeared in the Completion Accounts) rather
than calculating it on a basis of time apportionment.
124<PAGE>
PART 2 - TAX COVENANT
---------------------
2 Covenant
--------
Subject to the provisions of this Schedule 5, the Covenantor
covenants with the Purchasers to pay to the Purchasers an amount
equal to the amount of:-
2.1 any Liability to Taxation which has arisen or arises as a result
of any Event which occurred on or before Completion; and
2.2 any liability to Taxation of a Company arising as a consequence
of or by reference to either of the following occurring or being
deemed to occur at any time after Completion:
2.2.1 the disposal by any Relevant Company of any asset or
of any interest in or right over any assets; or
2.2.2 any Relevant Company ceasing to be resident in the
United Kingdom for the purposes of a Tax;
and, for the purposes of this clause 2.2 the term "Relevant
Company" shall mean any company other than the Company and any
member of the Purchasers' group after Completion.
2.3 any liability to taxation of the Company which arises as a result
of the application of section 767A Taxes Act where such liability
relates to corporation tax for which the Company is not primarily
responsible and for which a company other than any member of the
Purchasers' group after Completion is primarily responsible;
2.4 any liability of the Company to make a payment by way of
reimbursement, recharge, indemnity, damages for breach of
contract or management charge connected with or representing
Taxation where such Taxation results from or is calculated by
reference to an Event before Completion, including for the
avoidance of doubt any liability to repay any amount paid in
respect of Group Relief;
2.5 any reasonable costs, fees or out of pocket expenses reasonably
incurred by the Company or the Purchasers in connection with:-
2.5.1 any Liability to Taxation or other liability in respect of
which the Covenantor is liable under paragraphs 2.1 to
2.4; or
2.5.2 taking or defending any action (including but not limited to
legal proceedings) under this Part 2 of this Schedule 5.
125<PAGE>
For the avoidance of doubt, the reference to "Liability to
Taxation" in paragraphs 2.1 and 2.2 shall include any Liability
to Taxation arising as a result of any Claim made after
Completion as a result of or in connection with any Event which
occurred on or before Completion.
3 Quantification
--------------
For the purposes of paragraph 2 the amount of a Liability to
Taxation will be:
3.1 in the case of liability to make an actual payment of Taxation,
the amount of the actual payment of Taxation which the Company is
liable to make;
3.2 in the case of the setting off of a Purchasers' Relief, the
amount of Tax which would have been payable but for the setting-
off of such Relief or, in the case of the loss of such a Relief,
the amount of tax which would otherwise have been relieved,
exempted or credited by the Relief so lost or the amount of the
repayment of Tax which would otherwise have been received (as the
case may be);
3.3 in the case of a liability within paragraph 2.4 of this deed, the
amount of the liability in question.
4 Due date for payment
--------------------
The due date for the making of a payment by the Covenantor under
this Part 2 of this Schedule 5 will be:-
4.1 the date falling five Business Days after one of the Purchasers
has served notice on the Covenantor demanding such payment; or
4.2 in any case involving a liability of the Company or the
Purchasers to make an actual payment (whether or not a payment of
Taxation), the later of the date mentioned in paragraph 4.1 and
the date falling two Business Days before the last date upon
which the payment is required to be made to the person entitled
to the payment without any interest, penalty, fine or surcharge
arising in respect thereof (after taking into account any
postponement of the due date for payment of any Taxation which is
obtained).
5 Deductions from payments
------------------------
5.1 All sums payable by the Covenantor under this Part 2 shall be
paid gross free and clear of any rights of counterclaim set-off
and without any deduction or withholding unless the deduction or
withholding is required by law in which event the Covenantor
shall pay such additional amount as shall be required to ensure
that the net amount received and retained (free of any liability)
by the Purchasers will equal the full amount which would have
been received by it had no such deduction or withholding been
required.
126<PAGE>
5.2 If any amount payable by the Covenantor under this Part 2 is
subject to Tax in the hands of the Purchasers (or would be
subject to Tax but for the utilisation or set-off of a
Purchasers' Relief) the amount so payable shall be grossed up by
such amount as will ensure that after deduction of the Tax in
question (including where relevant Tax which would have arisen
but for the said utilisation of set-off) there shall be left an
amount equal to the amount that would otherwise be received and
retained by the Purchasers in the absence of such tax.
PART 3 - LIMITATION OF VENDOR'S LIABILITY
-----------------------------------------
6. Exclusions
----------
6.1 The Covenantor will not be liable under Part 2 of this Schedule
5 in respect of a Liability to Taxation or other liability or
under the Taxation Warranties to the extent to which:-
6.1.1 such Liability to Taxation or other liability would
not have arisen but for a change in legislation (including
but not limited to an increase in rates of Taxation) or in
the published practice of any Taxation Authority first
enacted or announced after Completion; or
6.1.2 such Liability to Taxation or other liability would
not have arisen but for the decision of any court or
tribunal which is delivered after Completion other than
pursuant to paragraph 7 or on which any appeal of the
Company for Taxation purposes which is current at Completion
depends where such appeal is disclosed in the Disclosure
Letter; or
6.1.3 such Liability to Taxation or other liability would
not have arisen but for the Company changing any of its
accounting policies, bases or practices (including, but not
limited to, the date to which the Company prepares its
accounts, the treatment of timing differences and the bases
on which the Company values its assets) after Completion
whether as a result of any change in generally accepted
accounting principles after Completion or otherwise (other
than a change required because such policies, bases or
practices before Completion were not in accordance with
generally accepted accounting principles current at
Completion); or
6.1.4 such Liability to Taxation or other liability would
not have arisen but for a voluntary act, transaction or
omission of the Company after Completion otherwise than in
the ordinary course of business of the Company and:-
6.1.4.1 otherwise than pursuant to a legally
binding obligation entered into by the Company on or
before Completion or imposed on the Company by any
legislation whether coming into force before, on or
after Completion; and
6.1.4.2 which either of the Purchasers was aware
or ought reasonably to have been aware would give
rise to the Liability to Taxation or other liability
in question; or
127<PAGE>
6.1.5 such Liability to Taxation or other Liability would
not have arisen but for the Company ceasing to carry on any
trade or business after Completion or effecting a major
change after Completion in the nature or conduct of any
trade or business carried on by it; or
6.1.6 such Liability to Taxation or other liability would
not have arisen but for the failure by the Company after
Completion to make any claim, election, surrender or
disclaimer or to give any notice or consent or to do any
other thing, the making, giving or doing of which was
permitted by law and which was taken into account:-
6.1.6.1 in computing and so reducing any provision
for deferred Taxation which appears in the Balance
Sheet (or eliminating any provision for deferred
Taxation which, but for such Relief, would have
appeared in the Balance Sheet); or
6.1.6.2 in computing any right to a repayment of
Taxation which appears in the Balance Sheet; or
and the need to make, give, or do which was notified to the
Purchaser in writing in reasonable time to permit the same
to be done.
6.1.7 such Liability to Taxation or other liability would
not have arisen but for the voluntary withdrawal or
amendment by the Company after Completion of any claim,
election, surrender, disclaimer, notice or consent made by
the Company prior to Completion in relation to any Relief
which was taken into account:-
6.1.7.1 in computing and so reducing any provision
for deferred Taxation which appears in the Balance
Sheet (or eliminating any provision for deferred
Taxation which, but for such Relief, would have
appeared in the Balance Sheet); or
6.1.7.2 in computing any right to a repayment of
Taxation which appears in the Balance Sheet; or
6.1.8 such Liability to Taxation or other liability would
not have arisen but for any failure or delay by the
Purchasers or the Company in paying over to any Taxation
Authority any payment previously made by the Covenantor
under this Schedule 5; or
6.1.9 the claim is in respect of the disallowance, non
availability or use of any Covenantor's Relief.
128<PAGE>
6.2 The Covenantor will not be liable in respect of any claim under
the Taxation Warranties to the extent provided in paragraphs
6.1.1 to 6.1.9.
7 Claims procedure
----------------
7.1 The First Purchaser will, or will procure that the Company will:-
7.1.1 as soon as reasonably practicable and, in any event,
within ten Business Days after the making of any assessment
by any Taxation Authority give notice of any Claim to the
Covenantor (with such reasonable details as are available to
the Purchaser), provided that the giving of such notice will
not be a condition precedent to the liability of the
Covenantor under this Schedule 5 including, for the
avoidance of doubt, any liability under the Taxation
warranties; and
7.1.2 subject to clause 7.4 not settle or take any action
in relation to the Claim without first giving the
Covenantor the opportunity to dispute, appeal against,
settle or compromise the Claim in accordance with paragraph
7.2 below; and
7.2 If the Covenantor first indemnifies and secures the Company and
the Purchasers to the reasonable satisfaction of the First
Purchaser against all losses and costs, damages and expenses
(including interest on overdue Taxation) which may be incurred
thereby, the First Purchaser will procure that the Company, at
the Covenantor's cost and expense, takes such action and gives
such information and assistance in connection with its Taxation
affairs as the Covenantor may request to dispute, appeal against,
settle or compromise any Claim, including but not limited to:-
7.2.1 applying to postpone (so far as legally possible)
the payment of any Taxation; and
7.2.2 allowing the Covenantor to undertake, at the
Covenantor's own cost and expense, the conduct of the
Dispute
PROVIDED that:-
7.2.2.1 the First Purchaser shall have the right to approve
the advisors (including without limitation legal and
accountancy advisors) to be appointed or used by the
Covenantor in connection with the matters
contemplated by this paragraph 7.2 (such approval
not to be unreasonably withheld or delayed); and
7.3 The Covenantor will promptly and fully inform the First Purchaser
of all matters relating to any Dispute conducted by or at the
request of the Covenantor and will provide the First Purchaser
with copies of all correspondence and other documents relating
thereto and will not submit any material communication to any
Taxation Authority nor agree or settle any Claim without the
prior written approval of the First Purchaser, not to be
unreasonably withheld or delayed.
129<PAGE>
7.4 If the Covenantor does not request the First Purchaser or the
Company to take action pursuant to sub-paragraph 7.2 or shall
fail to indemnify and secure the First Purchaser or the Company
concerned as mentioned therein within 14 Business Days of the
said notice to the Covenantor the First Purchaser or the Company
shall be free to pay or settle the Claim for Tax on such terms as
it may in its reasonable discretion think fit.
7.5 The First Purchaser shall not be obliged to take or procure the
taking of the following action pursuant to sub-paragraph 7.2 :-
7.5.1 agree to the settlement or compromise of any Claim
for Tax or any proposal for the same which will in the
reasonable opinion of the First Purchaser affect the future
liability to Tax of the Company, either Purchaser or any
member of the Purchasers' Group unless the Covenantor
indemnifies the Purchasers and the Company to its reasonable
satisfaction against any such liability to Tax;
7.5.2 contesting any Claim for Tax before any court or
appellate body (excluding the General Commissioners of
Inland Revenue, the Special Commissioners of the Inland
Revenue or the Value Added Tax Tribunal in the UK and any
equivalent thereof outside the UK) unless at the sole
expense of the Covenantor the Covenantor obtains the written
opinion of Tax Counsel of at least 10 years standing after
disclosure of all relevant information and documents that
having regard to all the circumstances it is reasonable to
resist the Claim for Tax and contest it before the appellant
body in question.
7.6 If it is alleged by any Tax Authority in writing that the
Covenantor (at any time) or the Company (prior to the Completion)
has committed any act or omission constituting fraudulent or
negligent conduct relating to Tax the subject of any subsisting
claim for Tax sub-paragraph 7.2 shall not apply and the
Covenantor shall cease to have any rights thereunder.
8 Time limit
----------
The Covenantor will not be liable under this Schedule 5 in
respect of a Liability to Taxation or other liability of the
Company or any claim under the Taxation Warranties unless within
seven years after the date of this Agreement either Purchaser has
given notice to the Covenantor of any Claim relating to such
Liability to Taxation or any claim under the Taxation warranties
or other liability and unless legal proceedings in respect of
such claim are commenced and served upon the Covenantor within
nine months after such written particulars have been given to the
Covenantor.
9 Mitigation of liability
-----------------------
9.1 The Purchasers will, at the Covenantor's request and expense,
procure that the Company:-
130<PAGE>
9.1.1 subject to paragraph 9.3 uses all such Covenantor's
Reliefs (including by way of surrender from one company to
another) and makes all such claims, elections, surrenders
and consents in relation thereto as are necessary to reduce
or eliminate so far as possible, any Liability to Taxation
or other liability of the Company which would, apart from
this paragraph 9.1.1, give rise to a liability on the part
of the Covenantor under this Schedule 5 including, for the
avoidance of doubt, a liability under the Taxation
Warranties; and
9.1.2 delivers to the Covenantor a certificate from the
Auditors (at the Covenantor's cost) confirming that all such
Covenantor's Reliefs have been so used and all such claims,
elections, surrenders and consents are made.
9.2 The Covenantor may, in particular but without limitation, by
notice in writing to the Purchasers reduce or eliminate any
liability which the Covenantor would, apart from this paragraph
9.2, have under this Schedule 5 including, for the avoidance of
doubt, liability under the Taxation Warranties by surrendering or
procuring the surrender to the Company at no cost to the Company
of Group Relief, Fiscal Unity, ACT or an overpayment of
corporation tax (without the Purchasers or the Company being
liable to make any payment in consideration for such surrender)
and the Covenantor's liability under this Schedule 5 including,
for the avoidance of doubt, liability under the Taxation
Warranties will be reduced or eliminated to the extent of the
amount of Taxation actually reduced or eliminated by such
surrender. At the Covenantor's cost, the Purchasers will procure
that the Company takes all such steps, including (without
limitation) making and giving all such claims and consents, as
the Covenantor may reasonably request to effect any such
surrender.
9.3 The Purchasers may elect not to use Covenantor's Reliefs as set
out in paragraph 9.1.1 but any such Covenantor's Relief shall,
for the purposes of this Schedule be deemed to have been so used
as set out in paragraph 9.1.1 and any Liability to Taxation or
other liability of the Company which would give rise to a
liability on the part of the Covenantor under this Schedule 5,
including a liability under the Taxation Warranties, shall be
reduced or eliminated to the extent that they would have been
reduced or eliminated under paragraph 9.1.1 if the Purchasers had
actually utilised any Covenantor's Reliefs.
10 Savings and Repayments
----------------------
10.1 If, at the Covenantor's request and expense, the Auditors
determine that the Company has obtained a Saving or a Repayment
has been made, the Saving, Repayment (as the case may be) will be
applied as follows:-
10.1.1 first, the amount of the Saving, Repayment will be
set off against any payment then due from the Covenantor
under this Schedule 5 including, for the avoidance of doubt
any payment due under the Taxation Warranties;
10.1.2 secondly, to the extent that there is an excess
after the application under sub-paragraph 10.1.1, the
Purchasers will, within ten Business Days, pay to the
Covenantor the lesser of:-
131<PAGE>
10.1.2.1 the amount of the excess; and
10.1.2.2 any amount previously paid by the
Covenantor under this Schedule 5 including, for the
avoidance of doubt any payment due under the
Taxation Warranties less any amount previously
repaid to the Covenantor under this paragraph 10;
10.1.3 thirdly, to the extent that the excess referred to
in paragraph 10.1.2 is not exhausted, the remainder of that
excess will be carried forward and set off against any
future liability of the Covenantor under this Schedule 5
including, for the avoidance of doubt any liability under
the Taxation Warranties.
10.2 In determining the amount of a Repayment, there will be deducted
any losses and any reasonable costs and expenses incurred by the
Company, the Purchasers or any other member of the same group of
companies as the Purchasers in obtaining, or as a result of
obtaining, the Repayment.
10.3 Subject to paragraph 10.5 below the Company will not be treated
as having obtained a Saving until the last date upon which it
would have been obliged to make the actual payment of Taxation
which has been reduced or eliminated in order to avoid incurring
interest thereon.
10.4 The Company will not be treated as having obtained a
Repayment until it receives an actual repayment of Taxation.
10.5 In determining when the Company receives a Saving account
shall first be taken of all Future Reliefs save to the extent
that any Relief giving rise to a Saving would be lost if not
utilised prior to any Future Relief.
10.6 Where a determination has been made by the Auditors under
paragraph 10.1 as to whether or not the Company has obtained a
Saving or a Repayment, the Covenantor or the Purchasers or the
Company may request the Auditors to review such determination (at
the expense of the person(s) making the request) in the light of
all relevant circumstances, including any facts which have become
known only since such determination, and to determine whether
such determination remains correct or whether, in the light of
those circumstances, the amount that was the subject of such
determination should be amended.
10.7 If the Auditors determine under paragraph 10.5 that an amount
previously determined should be amended, that amended amount will
be substituted for the purposes of paragraph 10.1 in place of the
amount originally determined, and such adjusting payment (if any)
as may be required by virtue of such substitution will as soon as
reasonably practicable be made by the Covenantor to the
Purchasers or by the Purchasers to the Covenantor, as the case
may be.
132<PAGE>
10.8 In determining whether or not the Company has obtained a Saving
or a Repayment has been made and, if so, the amount, and in
reviewing such a determination under paragraph 10.7, the Auditors
will act as experts and not as arbitrators and their
determination will (in the absence of manifest error) be
conclusive and binding on the parties.
10.9 The Purchasers will inform the Covenantor as soon as reasonably
practicable after it or the Company becomes aware that the
Company has obtained a Saving or a Repayment.
PART 4 - CORPORATION TAX RETURNS AND CONDUCT OF TAXATION AFFAIRS
----------------------------------------------------------------
11.1 The Covenantor or its duly authorised agents will, at the
Covenantor's cost and expense, prepare the corporation tax
returns and computations of the Company for all accounting
periods ended on or before Completion, to the extent that they
have not been prepared before Completion, and will submit them to
the Purchaser.
11.2 The Purchaser will procure that the Company causes the returns
and computations mentioned in paragraph 11.1 to be authorised,
signed and submitted to the Company's Inspector of Taxes without
amendment or with such amendments as the Covenantor, agrees
after considering any comments made by the Purchaser provided
that the Company shall not be obliged to sign, submit or
authorise anything which is not true and accurate in all material
respects.
11.3 The Covenantor or its duly authorised agents will, at the
Covenantor's cost and expense, prepare all documentation and deal
with all matters (including correspondence) relating to the
corporation tax returns and computations of the Company for all
accounting periods ended on or before Completion. The Covenantor
will not without the prior written consent of the Purchaser (such
consent not to be unreasonably withheld or delayed) transmit any
communication (whether written or otherwise) to, or agree any
matter with, the Company's Inspector of Taxes. If the Covenantor
has not received any response to a request for consent from the
Purchaser within 15 Business Days (including the date of request)
of such request being made then the Covenantor shall be free to
transmit the communication or agree the matter for which consent
was sought
11.4 The Purchaser will procure that the Company, at the Covenantor's
' cost and expense, affords the Covenantor or is duly authorised
agents such access to the Company's books, accounts and records
as is reasonable to enable the Covenantor or its duly authorised
agents to prepare the corporation tax returns and computations of
the Company for all accounting periods ended on or before
Completion and conduct matters relating to them in accordance
with this Part 4 of this Schedule 5.
11.5 The Covenantor will take reasonable steps to ensure that the
corporation tax returns and computations of the Company for all
accounting periods ended on or before Completion are prepared and
agreed with the Company's Inspector of Taxes as soon as is
reasonably practicable.
133<PAGE>
11.6 The Purchaser will procure that the Company promptly makes or
gives such claims, elections, surrenders and consents in relation
to Taxation for all accounting periods of the Company ended on or
before Completion as the Covenantor reasonably requests in
writing, including (without limitation) any Group Relief
surrender or claim by the Company and the carry forward, carry
back, acceptance or surrender or any Covenantor's Relief, and
generally does all such things as may be necessary to give effect
to such claims, elections, surrenders or consents.
11.7 The Covenantor will not and the Purchaser will not and will
procure that the Company does not amend or withdraw any such
return or computation as is referred to in paragraph 11.1 or 11.2
or any such claim, election, surrender or consent as is referred
to in paragraph 11.6 without the prior written consent of the
Covenantor or the Purchaser, as the case may be.
11.8 With the exception of any payment made to or by the Company prior
to Completion and provided for in the Completion Accounts, the
Company will not be entitled to any payment in respect of any
Relief surrendered by it pursuant to paragraph 11.6 and will not
be obliged to make any payment in respect of any Relief
surrendered to it pursuant to paragraph 11.6.
11.9 The Covenantor will keep the Purchaser fully informed of its
conduct of the Company's Taxation affairs pursuant to this Part 4
of this Schedule 5 and will promptly provide the Purchaser with
copies of all relevant documents.
11.10 Nothing in clause 11.3 shall oblige the Purchaser to submit
any documentation, return, computation or communications which
is, in the reasonable opinion of the First Purchaser, likely to
adversely affect the future tax liability of the Company unless
the Covenantor first indemnifies the Company to the reasonable
satisfaction of the First Purchaser against such additional
liability.
11.11 If in the course of correspondence between the Covenantor
and any Taxation Authority in relation to any matter under this
clause 11 any matter arises which gives rise to a claim or is
likely to give rise to a Claim under clause 2 of this Schedule 5
then the provisions of this clause 11 shall cease to apply and
the provisions of clause 7 shall apply.
PART 5 - GENERAL
----------------
12 General
-------
12.1 All payments by the Covenantor under this Schedule 5 will be
treated as repayments by the Vendors of the consideration paid
for the Shares pursuant to this Agreement, provided that this
paragraph 12 will not operate in any way to limit the liability
of the Covenantor under this Schedule 5.
12.2 For the avoidance of doubt, the Covenantor shall remain liable
or not in accordance with the terms of this Schedule 5
134<PAGE>
notwithstanding that the relevant Liability to Taxation or other
liability is discharged or reduced or eliminated after
Completion.
PART 6 - ENGLISH TAXATION WARRANTIES
1 Returns, Disputes and Clearances
--------------------------------
1.1 All notices, returns, computations, registrations and payments
which should have been made by the Company for any Taxation
purpose have been made within the requisite periods and were
made and remain in all material respects true complete and
accurate and none of them is, or so far as the Vendor is aware is
likely to be, the subject of any dispute with any Taxation
Authority.
1.2 The Company is not and has not been involved in any dispute with
any Taxation Authority and, so far as the Vendor is aware, there
are no circumstances which are likely to give rise to any such
dispute.
1.3 The Taxation affairs of the Company have never been the subject
of any investigation or enquiry by any Taxation Authority (other
than routine questions and audit visits), and no Taxation
Authority has indicated that it intends to investigate the
Taxation affairs of the Company.
1.4 The Disclosure Letter contains details, so far as they affect the
Company, of all current concessions, arrangements and agreements
(whether formal or informal) negotiated with any tax authority
and no action has been taken by or on behalf of the Company which
has had or so far as the Vendor is aware is likely to have the
result of altering, prejudicing or in any way disturbing any such
concession, arrangement or agreement.
2 Penalties and Interest
----------------------
2.1 The Company has not since the Accounting Date paid, and, so far
as the Vendor is aware, paid and is not liable to pay, any fine,
penalty, charge, surcharge or interest charged by virtue of any
of the provisions of TMA or any other Taxation Statute.
2.2 So far as the Vendor is aware, there are no circumstances which
are likely to cause the Company to become liable to pay any fine,
penalty, charge, surcharge or interest, or become subject to any
forfeiture, as mentioned in paragraph 2.1 of this Part 6.
3 Distributions and Payments
--------------------------
3.1 The Company has deducted and properly accounted to the
appropriate Taxation Authority for all amounts which it has been
obliged to deduct in respect of Taxation, has complied in all
material respects with all reporting requirements relating to all
such amounts and has (where required by the applicable Taxation
Statute) duly provided certificates of deduction of tax to the
recipients of payments from which deductions have been made.
135<PAGE>
3.2 No rents, interest, annual payments or other sums of an income
nature paid or payable by the Company, or which the Company is
under an obligation to pay in the future, are wholly or partially
disallowable as deductions or charges in computing profits for
the purposes of corporation tax by reason of sections 74, 125,
338, 494 or 774 to 787 (inclusive) of the Taxes Act or otherwise.
3.3 The Company has not at any time declared, paid or made any
dividend or other payment which is, or could be treated as, a
distribution for the purposes of Part VI ICTA or section 418 ICTA
except any dividend disclosed in its audited statutory accounts
nor is it bound to make such a distribution.
4 Group Transactions
------------------
4.1 The Company has not at any time joined in the making of any
election pursuant to section 247 ICTA.
4.2 The Company has not at any time in the last 6 years made,
received or agreed to make or receive any:-
4.2.1 claims to surrender any amount by way of Group or
Consortium Relief pursuant to sections 402 to 413
(inclusive) ICTA and has not made or received and is not
liable to make or entitled to receive a payment for Group
Relief.
4.2.2 claims to surrender any amount of surplus ACT
pursuant to section 240 ICTA and has not made or received
and is not liable to make or receive a payment for surrender
of ACT
4.3 The Company has not within the last six years acquired any asset
from another company which was at the time a member of a group of
companies for the purpose of Sections 178 and 179 TCGA.
4.4 The Company has not within the last six years ceased to be a
member of a group of companies for the purposes of Sections 178
and 179 TCGA otherwise than as part of a merger to which Section
191 TCGA applies.
5 Gifts
------
5.1 There is no outstanding Inland Revenue charge (as defined in
section 237 IHTA) over any asset of the Company or over any of
the Shares.
5.2 There are in existence no circumstances by virtue of which any
such power as is mentioned in section 212 IHTA could be exercised
in relation to any asset of the Company or to any of the Shares
or by virtue of which any such power could be exercised but for
the provisions of section 204(6) IHTA.
136<PAGE>
6 Capital Gains
-------------
6.1 No chargeable profit or gain would arise in respect of any asset
of the Company if that asset were to be disposed of for a
consideration equal to the book value attributed thereto in the
Completion Accounts in each case disregarding any statutory right
to claim any allowance or relief other than amounts deductible
under Section 38 TCGA.
6.2 The Company has not at any time in the six years prior to
Completion:-
6.2.1 made a claim under any of Sections 152 to 157 TCGA
(replacement of business assets), Section 279 TCGA (relief
in respect of delayed remittances or gains), Section 23 TCGA
(compensation and insurance money), Section 24 TCGA
(negligible value) or Section 280 TCGA (consideration
payable by instalments);
6.2.2 been party to any Event falling within the terms of
Sections 135, 136 or 139 TCGA (company reconstructions and
amalgamations);
6.2.3 been party to any Event falling within Sections 29,
30, 31, 32, 33, 34 (value shifting) or 17 (disposals and
acquisitions treated as made at market value) TCGA;
6.2.4 exercised an option under Section 280 TCGA
(consideration payable by instalments in connection with any
disposal);
6.2.5 received or become entitled to receive any capital
distribution for the purpose of Section 122 TCGA
(distribution which is not a new holding within a
reorganisation); or
6.2.6 received any asset by way of gift;
6.2.7 made any claim and nor has any claim been made or is
entitled to be made by any person in respect of any asset
which will or may result in a Tax Liability by
virtue of Section 154 TCGA (new assets which are
depreciating assets);
The Company has not at any time made an election under section
35(5) TCGA nor has the Company made its first relevant disposal
for the purposes of section 35(6) TCGA.
7 Capital Allowances
------------------
7.1 If all the assets in respect of which allowances have been
claimed under "Parts l (Industrial Buildings and Structures) and
II (machinery and plant) of the CAA and owned by the Company at
the Accounting Date were to be sold by the Company for an amount
equal to the value attributed to such assets in the Completion
Accounts then (ignoring any reliefs or allowances available to
the Company other than qualifying expenditure under Part II of
the CAA) no balancing allowance or balancing charge would be made
on the Company.
137<PAGE>
7.2 The Company has not:
7.2.1 incurred any capital expenditure on the provision of
machinery or plant for leasing;
7.2.2 made any election under Section 44 CAA.
7.3 The Company does not own any asset which is or is capable of
being a long-life asset as defined in Section 38A CAA.
7.4 The Company has not made any election under section 37 CAA nor is
it taken to have made any such election under section 37(8)(c)
CAA.
7.5 The Company has not obtained any capital allowances under Chapter
VI Part II CAA.
8 VAT: General
-------------
The Company:-
8.1 is duly registered and is a taxable person for the purposes of
VAT and is not required to register for VAT or any equivalent tax
in any other jurisdiction;
8.2 has complied in all material respects with all statutory
requirements, orders, provisions, directions or conditions
relating to VAT;
8.3 maintains in all material respects, correct and up-to-date
records and invoices and other documents for the purposes of all
legislation relating to VAT;
8.4 is not in arrears with any payment or returns or failed to submit
any information required under legislation relating to VAT or
excise duties, or liable to any abnormal or non-routine payment
of VAT, or any forfeiture or penalty, or to the operation of any
penal provision;
8.5 has not been or applied for treatment as a member of a group for
VAT purposes under section 43 VATA;
8.6 is not, and has not agreed to become, an agent, manager or factor
for the purposes of section 47 VATA of any person who is not
resident in the United Kingdom;
8.7 is not operating any special arrangement or scheme relating to
VAT;
8.8 has not been required by the Commissioners of Customs and Excise
to give security under paragraph 4 of Schedule 11 VATA;
8.9 is not at the date hereof liable under the Parts XVIII or XIX of
the VAT Regulations to repay any VAT refunded to it;
138<PAGE>
8.10 is not partially exempt;
8.11 has not purchased or agreed to purchase any assets to which
Article 5 Value Added Tax (Special Provisions) Order 1995 (SI
1995/1263) applied or would apply as amended by (SI 1997/1616)
the Value Added Tax (Special Provisions) Order 1997;
8.12 does not own any asset and has not incurred any expense in
respect of which Part XV of the VAT Regs (Capital Goods Scheme)
applies;
8.13 The Companies being purchased by the Purchasers are all members
of the same VAT group or groups, and no companies except those
companies being purchased, are in such VAT group or groups.
No Event has occurred as a result of which the provisions of
Schedule 9A VATA have been applied, or apply.
9 VAT: Property Transactions
--------------------------
9.1 Neither the Company nor any relevant associate (within the
meaning of paragraph 3(7) Schedule 10 VATA) has made any election
under paragraph 2(1) Schedule 10 VATA in respect of any land in,
over or in respect of which the Company has any interest, right
or licence to occupy and the Company is not aware of any
intention to make such an election.
9.2 The Company does not own the fee simple in any building or work
such as is referred to in Item 1(a) Group 1 Schedule 9 VATA.
10 Stamp Duty
----------
10.1 All documents which are liable to stamp duty and which confer
title to any asset owned by the Company at Completion have been
duly stamped and no such document has been retained outside the
United Kingdom which would be subject to Stamp Duty if brought
into the United Kingdom.
10.2 The Company has no liability in respect of Stamp Duty Reserve Tax
and has complied with the provisions of Part IV Finance Act 1986.
11 Residence and Offshore Interests
11.1 The Company is and has at all times been resident in the United
Kingdom for the purposes of all Taxation Statutes and has not at
any time been resident outside the United Kingdom for the
purposes of any Taxation Statute or any double taxation
arrangements and does not carry on any trade outside the United
Kingdom.
11.2 The Company has not at any time been subject to Taxation in any
jurisdiction outside the United Kingdom or had a branch outside
the United Kingdom or any permanent establishment (as that
expression is defined in the respective double taxation relief
orders current at the date of this Agreement) outside the United
Kingdom.
139<PAGE>
12 Loan Relationships, Foreign Exchange and Interest Rate and
Currency Contracts
-----------------------------------------------------------
12.1 No loan relationship of the Company (as defined in S87 Finance
Act 1996) is one to which Sections 93 (Relationships linked to
chargeable assets), 94 (Indexed Gilts), 95 (Gilt Strips) or 96
(Other Gilts) of Finance Act 1996 apply or has an unallowable
purpose as defined in paragraphs 13 of Schedule 9 FA 1996 and
there is no creditor relationship of the Company which represents
an asset to which Section 92 (Convertible Securities) applies.
12.2 No Tax Liability or non trading deficit will arise from any loan
relationship of the Company as a result of any debt under such
loan relationship being settled at the Completion Date.
12.3 The Company operates and has in each accounting period of the
company ending after 31 March 1996 operated an accruals basis of
accounting in relation to its loan relationships authorised under
Section 85 FA 1996.
12.4 No interest or other amount treated as a creditor by the Company
(including imputed interest under Sections 770 to 773 Taxes Act)
remains unpaid and each such debit, save where it relates to
unpaid interest, can be deducted in computing the taxable profits
of the Company.
12.5 The Company:-
12.5.1 does not hold any qualifying asset and nor is it a
party to any currency contract for the purposes of Chapter
II of Part II of FA 1993 (Exchange Gains and Losses);
12.5.2 is not a party to a qualifying contract for the
purposes of Chapter II of Part IV of FA 1994 (Interest Rate
and Currency Contracts and Options).
13 Tax Avoidance
-------------
13.1 The Company has never:-
13.1.1 entered into, been party to or otherwise been
concerned with any Event as a result of which any provision
of Part XVII Taxes Act applied applies or may apply;
13.1.2 been party to or concerned with any scheme or
arrangement of which the main purpose or one of the main
purposes was the avoidance of a liability to tax.
140<PAGE>
14 Insurance
---------
14.1 The Company:-
14.1.1 has not acquired any benefit under any policy of
assurance otherwise than as original beneficial owner;
14.1.2 has not acquired for a consideration in money or
moneys worth any policy of assurance or contract for a
deferred annuity on human life within the meaning of Section
210 TCGA.
15 Miscellaneous
-------------
15.1 The Company does not participate in a scheme registered under
Chapter III of Part V Taxes Act and no application for the
registration of any such scheme has been made.
16 The Company has not at any time since 6 April 1965;
16.1 purchased or agreed to purchase, repaid or agreed to repay or
redeemed or agreed to redeem any of its share capital for the
purpose of section 210 of the Taxes Act;
16.2 capitalised or agreed to capitalise in the form of shares or
debentures any profits or reserves of any class or description
nor has it passed or agreed to pass any resolution to do so.
17.1 No notice of the making of a direction under section 747 of the
Taxes Act 1988 has been received by the Company and no
circumstances exist which would entitle the Board of the Inland
Revenue to make such a direction so as to apportion any profits
of a controlled foreign company to the Company pursuant to
section 752 of the Taxes Act.
17.2 The Company has not received any foreign loan interest on which
double taxation relief will or may be restricted under section
798 of the Taxes Act.
17.3 The Company has not elected for any dividend to be treated as a
foreign income dividend within chapter VX Part VI ICTA.
PART 7 - DUTCH TAX WARRANTIES
-----------------------------
1 Returns, Disputes and Clearances
--------------------------------
1.1 So far as the Second Vendor is aware, all notices, returns,
computations, registrations and payments which should have been
made by the Company for Taxation purposes have been made within
the requisite period and are in all material respects correct and
none of them is, or is likely to be, the subject of any dispute
with any Taxation Authority.
1.2 The Company is not involved in any dispute with any Taxation
Authority concerning any matter likely to affect in any way the
liability of the Company to Taxation and, so far as the Second
Vendor is aware, there are no circumstances which are likely to
give rise to any such dispute.
141<PAGE>
1.3 The Taxation affairs of the Company has never been the subject of
any investigation or enquiry by any Taxation Authority (other
than routine questions and audit visits), no Taxation Authority
has indicated that it intends to investigate the Taxation affairs
of the Company
2 Penalties and Interest
----------------------
2.1 The Company has not since the Accounting Date paid, and, so far
as the Second Vendor is aware, is not liable to pay, any fine,
penalty, charge, surcharge or interest charged by virtue of any
of the provisions of the Taxation Statute.
2.2 So far as the Second Vendor is aware, there are no circumstances
which are likely to cause the Company to become liable to pay
any fine, penalty, charge, surcharge or interest, or become
subject to any forfeiture, as mentioned in paragraph 2.1 of this
Part 7.
3 Distribution and Payments
-------------------------
The Company has deducted and properly accounted to the
appropriate Taxation Authority for all amounts which it has been
obliged to deduct in respect of Taxation, has complied in all
material respects with all reporting requirements relating to all
such amounts and has (where required by the applicable Taxation
Statute) duly provided certificates of deduction of tax to the
recipients of payments from which deductions have been made.
4 VAT
----
The Company:
4.1 is duly registered and is a taxable person for the purposes of
VAT;
4.2 has complied in all material respects with all statutory
requirements, orders, provisions, directions or conditions
relating to VAT;
4.3 maintains in all material respects, correct and up-to-date
records for the purposes of all legislation relating to VAT;
4.4 is not in arrears with any payment or returns under legislation
relating to VAT or excise duties, or liable to any abnormal or
non-routine payment of VAT, or any forfeiture or penalty, or to
the operation of any penal provision;
4.5 has not been or applied for treatment as a member of a group for
VAT purposes under art.7 VATA 1969.
142<PAGE>
5 Residence and Offshore Interest
-------------------------------
5.1 The Company is and has at all time been resident in the
Netherlands for the purposes of all Taxation Statutes and has not
at any time been resident outside the Netherlands for the
purposes of any Taxation Statute or any double taxation
arrangements.
5.2 The Company has not at any time been subject to Taxation in any
jurisdiction outside the Netherlands, or had a branch outside the
Netherlands or any permanent establishment (as that expression is
defined in the respective double taxation relief orders current
at the date of this Agreement) outside the Netherlands.
6 Fiscal Unity
------------
The Company has never been a member of a Fiscal Unity other than
until March 1997, the Fiscal Unity with the Second Vendor, which
has never included any other members than the Company and the
Second Vendor.
143<PAGE>
SCHEDULE 6
----------
Adjustment of Initial Consideration in relation to the
English Shares and the Dutch Shares
------------------------------------------------------
1 In this Schedule 6 the following expressions have the following meanings:-
Expression Meaning
---------- --------
"the Accounts" The same meaning as in paragraph 1 of Parts
1, 2 and 3 of Schedule 4
"the Accounting Date" 31 March 1997
"the Completion Accounts" The accounts prepared in accordance
with this Schedule 6
"the Excluded Items" Cash in hand or at a bank, overdrafts,
loans between any Relevant Company and
any Vendor Group Member (but for
the avoidance of doubt excluding
Intra Group Trade Debtors and Intra
Group Trade Creditors, taxation
(including deferred taxation) and
costs of investment in other
Relevant Companies
"External Creditors" Trade creditors, accruals and other
creditors other than Intra Group
Trade Creditors
"External Debtors" Trade debtors, prepayments and other
debtors other than Intra Group
Trade Debtors
"the First Purchaser's BDO Stoy Hayward of 8 Baker
Street, Accountants"
London W1M 1DA
"the First Vendor's Price Waterhouse of 101
Accountants" Barbirolli Square, Lower
Mosley Street Manchester M2 3PW
"Intra Group Trade
Creditors" amounts owed on trading account and
not outstanding for more than 60
days by the Relevant Company (1) to
any other Relevant Company or
Relevant Companies and/or (2) to
any Vendor Group Member or Vendor
Group Members
144<PAGE>
"Intra Group Trade Debtors" amounts owed on trading account and
not outstanding for more than 60
days to the Relevant Company (1) by
any other Relevant Company or
Relevant Companies and/or (2) by
any Vendor Group Member of Vendor
Group Members
"Net Assets" In relation to each Relevant Company the
fixed assets plus stock plus External
Debtors plus Intra Group Trade
Debtors plus other amounts due to
the Relevant Company from another
Relevant Company or Relevant
Companies minus External Creditors
minus Intra Group Trade Creditors
minus other amounts due from the
Relevant Company to another
Relevant Company or Relevant
Companies minus finance lease
liabilities minus capital grants
(but for the avoidance of doubt
excluding the Excluded Items) as
extracted from the Completion
Accounts (the value of assets and
liabilities located in the
Netherlands and Germany being
converted into sterling at the
rates of 3.08 guilders and DM2.74
to the pound sterling respectively
irrespective of the actual
conversion rates on the date of
Completion)
"Relevant Companies" Together the English Companies, the other
English Group Members, the Dutch
Company and the other Dutch Group
Members
2 The parties shall procure that on the date of Completion or on
such other date the parties mutually agree a stock take shall be
carried out at each of the premises of the Relevant Companies (at
which representatives of the Purchasers, the First Purchaser's
Accountants and the First Purchaser's Dutch accountants and
representatives of the Vendors and the First Vendor's Accountants
and the First Vendors's Dutch accountants shall be present) for
the purposes of the preparation of the Completion Accounts.
3 The First Purchaser and the Second Purchaser shall procure that
by not later than 26 January 1998 draft Completion Accounts
together with a draft statement (the "Net Asset Statement") of
the Net Assets of the Relevant Companies in aggregate (the
"Aggregate Net Assets") shall be delivered to the First Vendor
and the First Vendor's Accountants.
145<PAGE>
4 The Completion Accounts shall:-
4.1 consist of a balance sheet of each of the Relevant Companies as
at the close of business on the date of Completion and a profit
and loss account of each of the Relevant Companies in respect of
the period from the Accounting Date to the date of Completion
(both dates inclusive);
4.2 be prepared in accordance with the same accounting policies,
principles and practices as were used in the preparation of the
Accounts including the relevant GAAP consistently applied; and
4.3 be prepared as if the period from the Accounting Date to the date
of Completion were a financial period of the Relevant Companies.
5 Within 21 days of receipt of the draft Completion Accounts and
the draft Net Asset Statement pursuant to paragraph 3 the First
Vendor's Accountants shall, having reviewed such draft, deliver
comments in writing on the draft Completion Accounts and the
draft Net Asset Statement to the First Purchaser's Accountants on
behalf of the First Purchaser. The First Purchaser's Accountants
shall notify the First Vendor's Accountants in writing within 14
days after receipt of such written comments whether or not they
accept that such drafts as amended by such written comments
comply with the provisions of this Schedule 6.
6 If within the period of 14 days referred to in paragraph 5 the
First Purchaser's Accountants shall notify the First Vendor's
Accountants in writing that they do not accept that such drafts
as amended by the written comments comply with the provisions of
this Schedule 6 then the First Purchaser's Accountants and the
First Vendor's Accountants shall use their reasonable endeavours
to reach agreement upon appropriate adjustment of such drafts.
7 In the event that the First Vendor's Accountants and the First
Purchaser's Accountants are unable to reach agreement as
aforesaid within 7 days following the expiry of the period of 14
days referred to in paragraph 6 any party shall be entitled to
refer any matter in dispute to the decision of a single
independent chartered accountant or an independent firm of
chartered accountants to be agreed upon between the parties or
(in default of such agreement within 7 days) to be selected (at
the instance of any of them) by the President for the time being
of the Institute of Chartered Accountants in England and Wales
("Independent Accountant"), and any such chartered accountant or
firm of chartered accountants shall act as expert (and not as
arbitrator) in connection with the giving of such decision which
shall be binding. In giving such decision the accountant or firm
shall state what adjustments (if any) are to be made to the draft
of the Completion Accounts and the draft Net Assets Statement in
order that they shall comply with the provisions of this Schedule
6.
146<PAGE>
8 If the First Purchaser's Accountants accept that such drafts as
amended by such written comments comply with the provisions of
this Schedule 6 then the Completion Accounts and the Net Assets
Statement shall be deemed to comply with the provisions of this
Schedule 6 and the final draft of the Completion Accounts and the
draft Net Assets Statement as adjusted by the independent
accountant or firm if appropriate shall be the Completion
Accounts and the Net Assets Statement for the purposes of this
Agreement and shall be final and binding on the parties.
9 The fees of any such independent accountant or firm shall be paid
as he (or that firm) shall direct or if no direction is given by
the party whose calculation of the Aggregate Net Assets prior to
determination of the same by such independent accountant or firm
was the most different in amount from the determination of the
amount of the Aggregate Net Assets by the independent accountant
or firm.
10 The Vendor and the Purchaser shall severally use all reasonable
endeavours to procure that all records, working papers and other
information as may be reasonably required for the purpose of this
Schedule 6 by the First Purchaser's Accountants and/or the First
Vendor's Accountants and/or independent chartered accountant or
firm of chartered accountants (whether in the possession of any
Relevant Company or any party to this Agreement or any
professional adviser of any such party) shall be made available
promptly upon request therefor and shall generally render all
reasonable assistance necessary for the preparation of the
Completion Accounts, the Net Assets Statement and the resolution
of any dispute in relation to the same.
11 Subject to paragraph 12, when the Completion Accounts and the Net
Assets Statement have become final and binding:-
11.1 the Initial Consideration shall be deemed to be reduced by the
amount (if any) by which the Aggregate Net Assets are less than
(BT.PD)32,959,000 (thirty-two million, nine hundred and fifty nine
thousand pounds); or
11.2 the Initial Consideration shall be deemed to be increased by the
amount (if any) by which the Aggregate Net Assets exceed
(BT.PD)32,959,000 (thirty-two million, nine hundred and fifty nine
thousand pounds); or
and within 5 Business Days of the Completion Accounts and the Net
Assets Statement becoming binding, the First Vendor shall pay to
the First Purchaser an amount equal to the deemed reduction in
the Initial Consideration or the First Purchaser shall pay to the
First Vendor an amount equal to the deemed increase in the
Initial Consideration (as the case may be). In the event that
either such amount shall not be paid on the due date such amount
shall carry interest from such date at the Agreed Rate accruing
on a daily basis until the date of actual payment.
12 Notwithstanding the provisions of paragraph 11, the Initial
Consideration shall not be deemed to be reduced or increased
pursuant to paragraph 11 in the event that the difference between
the Aggregate Net Assets and the figure set out in paragraph 11
is less than (BT.PD)250,000 (two hundred and fifty thousand pounds).
147<PAGE>
Subject to the due performance of paragraphs 11 and 12 the First
Purchaser shall have no claim against the First Vendor under the
Agreement or otherwise in respect of any liability or deficiency
to the extent that the same is taken into account in the
Completion Accounts.
148
<PAGE>
SCHEDULE 7
----------
Limitation of Liability
-----------------------
1 In this Schedule 7 "Claim" means any claim which would (but for
the provisions of this Schedule) be capable of being made against
the Vendors (or either of them) in respect of any liability for
breach of the Warranties, whenever given, (other than the
Taxation Warranties) and "Taxation Claim" means any claim which
would be capable of being made against the Vendors (or either of
them) under the Taxation Deed or in respect of any liability for
breach of the Taxation Warranties.
2 Notwithstanding the provisions of this Agreement and of the
Taxation Deed:-
2.1 the aggregate liability of the Vendors in respect of any Claim
or Claims and/or in respect of any Taxation Claim or Taxation
Claims shall be limited to the aggregate consideration received
by the Vendors pursuant to this Agreement;
2.2 the Vendors will be under no liability in respect of any Claim
(other than any Taxation Claim) where the amount for which the
Vendor would be liable under such claim is less than (BT.PD)10,000.
2.3 the Vendors will be under no liability in respect of any Claim
(other than any Taxation Claim) unless the amount of the Vendors'
liability in respect of such Claim (other than any Taxation
Claim) is (when aggregated with the total liability in respect of
any other Claim or Claims (other than any Taxation Claim) made by
the relevant Purchaser) in excess of (BT.PD)400,000 in which event a
Vendor will be liable for the whole amount and not merely the
excess;
2.4 The Vendors will be under no liability in respect of any Taxation
Claim unless the amount of the Vendors' liability in respect of
such Taxation Claim is (when aggregated with the total liability
in respect of any other Taxation Claim or Taxation Claims) in
excess of (BT.PD)450,000 in which event a Vendor will be liable for the
whole amount in excess of (BT.PD)450,000 but not for the first
(BT.PD)450,000.
2.5 neither of the Vendors will be under any liability in respect of
any Claim unless written particulars of the Claim (giving
reasonable details of the specific matter in respect of which
such Claim is made) shall have been given to the relevant Vendor
within a period of twenty-seven months from the date of this
Agreement and unless legal proceedings in respect of such Claim
are commenced and served upon the relevant Vendor within nine
months after such written particulars have been given to the
relevant Vendor;
2.6 neither of the Vendors will have any liability in respect of any
Claim:-
2.6.1 to the extent that it arises or is increased as a result of
an increase in rates of taxation after the date of this
Agreement, or the passing of any legislation (or making of
any subordinate legislation) with retrospective effect, or
any provision or reserve in the Completion Accounts being
insufficient by reason of any
increase in rates of taxation after the date of this
Agreement;
149<PAGE>
2.6.2 if it would not have arisen but for anything voluntarily
done or omitted to be done outside of the running and
operation of the Group Members in the ordinary and usual
course of business after Completion by either of the
Purchasers or any Group Member or any of their respective
agents or successors in title (save that nothing in this
paragraph shall preclude the Purchasers from bringing a
Claim if the Purchasers become aware of the Claim as a
result of such voluntary action);
2.6.3 which would not have arisen but for anything expressly done
or provided to be done or omitted to be done pursuant to
this Agreement or which is otherwise done or omitted to be
done at the specific request or with the written consent of
either of the Purchasers;
2.6.4 to the extent that it relates to any loss for which the
relevant Purchaser or any Group Member is indemnified fully
by insurance, or for which it would have been so indemnified
if at the relevant time there had been maintained valid and
adequate insurance cover of a type in force in relation to
any Group Member at the date of this Agreement;
2.6.5 to the extent that it relates to any matter provided for,
or included as a liability in the Completion Accounts;
2.6.6 to the extent that it arises as a result of any change in
the accounting policy or practice or in the accounting
reference date of any Group Member after Completion;
2.6.7 to the extent that the amount of the claim corresponds to an
increase in the value of the assets of the relevant
Purchaser or any Group Member resulting from the reduction
in its liability to taxation;
2.7 subject to paragraph 2.8 below, where a Purchaser or any Group
Member is entitled to recover from some other person any sum in
respect of any matter or event which could give rise to a Claim,
upon receipt of a satisfactory indemnity from the Vendors for
recovery of all reasonable costs, and expenses incurred by the
Purchasers, the Purchasers will (or will procure that the
relevant Group Member will) take all reasonable steps to recover
that sum before making such Claim, and any sum recovered will
reduce the amount of such Claim (and, in the event of the
recovery being delayed until after such claim has been satisfied
by the relevant Vendor, the sum recovered will be paid to the
relevant Vendor, after deduction of all reasonable costs and
expenses of the recovery);
2.8 the Purchasers shall be under no obligation to recover from some
other person if in their reasonable opinion the Purchasers
believe this would affect the business reputation or the goodwill
of the Purchasers or the relevant Group Member PROVIDED THAT if
the Purchasers or any Group Member elect not to seek recovery
from some other person pursuant to paragraph 2.7 of this Schedule
7, then the Purchasers shall not be entitled to pursue the Claim
or Taxation Claim against the Vendors and any such Claim or
Taxation Claim which has been notified to the Vendors or in
respect of which proceedings have commenced shall be
automatically withdrawn and the Vendors shall have no liability
in respect thereof.
150<PAGE>
2.9 payment of any Claim shall to the extent of such payment satisfy
and preclude any other Claim or Taxation Claim which is capable
of being made in respect of the same subject matter;
2.10 in assessing any damages or compensation payable by the Vendors
the value of the Group Members shall not be taken as exceeding
the Consideration payable under clause 3 and Schedule 6 of this
Agreement.
3 Upon either of the Purchasers or any Group Member becoming aware
that matters have arisen which will or are likely to give rise to
a Claim, the relevant Purchaser will and will, where appropriate,
procure that the relevant Group Member will:-
3.1 as soon as practicable notify the Vendors in writing of the
potential Claim and of the matters which will or are likely to
give rise to such Claim;
3.2 not make any admission of liability, agreement or compromise with
any person, body or authority in relation to the potential Claim
without prior consultation with the relevant Vendor or otherwise
take any action which may materially prejudice the Vendors'
position without the prior written consent of the relevant
Vendor;
3.3 at all times disclose in writing to the relevant Vendor all
information and documents relating to the potential Claim or the
matters which will or are likely to give rise to such Claim and,
if requested by the relevant Vendor, give such Vendor and its
professional advisers reasonable access to the personnel of the
Purchasers and/or the relevant Group Member as the case may be
and to any relevant premises, chattels, accounts, documents and
records within the power, possession or control of the Purchasers
and/or the relevant Group Member to enable the relevant Vendor
and its professional advisers to interview such personnel, and to
examine such claim, premises, chattels, accounts, documents and
records and to take copies or photographs thereof at their own
expense;
3.4 upon receipt of a satisfactory indemnity as to the reasonable
costs, liabilities and expenses of the Purchasers from the
Vendors , take such action as the relevant Vendor may reasonably
require to avoid, resist, contest or compromise the potential
Claim or the matters which will or are likely to give rise to
such Claim; and
3.5 the Purchasers shall not be obliged to co-operate with the
Vendors in the manner set out in paragraphs 3.2 to 3.4 if in
their reasonable opinion compliance with those paragraphs would
harm the Business reputation or the goodwill of the Purchaser or
the relevant Group Members PROVIDED THAT if the Purchasers fail
to comply with paragraphs 3.2 to 3.4 of this Schedule 7 then the
Purchasers shall not be entitled to pursue the Claim or Taxation
Claim against the Vendors and any such Claim or Taxation Claim
which has been notified to the Vendors or in respect of which
proceedings have commenced shall be automatically withdrawn and
the Vendors shall have no liability in respect thereof.
4 Nothing herein shall in any way diminish the Purchasers' or the
relevant Group Member's common law duty to mitigate its loss.
151<PAGE>
5 If any potential Claim shall arise by reason of a liability of
any Group Member which is contingent only, then the Vendors shall
not be under any obligation to make any payment in respect of
such claim until such time as the contingent liability ceases to
be contingent and becomes actual.
6 The Vendors will not be liable for any claim to the extent that
the subject matter of the claim is taken into account in the
Completion Accounts or any repayment pursuant to clauses 6.11 to
6.13 inclusive.
7 The provisions of this Schedule apply notwithstanding any other
provision of this Agreement or its Schedules to the contrary and
will not cease to have effect in consequence of any rescission or
termination by the Purchasers of any other provisions of this
Agreement.
8 The provisions of the Taxation Deed which are expressed to relate
to the Taxation Warranties shall apply in respect of any breach
of the Taxation Warranties as if set out in full in this
Schedule.
9 None of the limitations in this Schedule 7 shall apply in
relation to the Warranties contained in paragraph 3 of Part 1 of
Schedule 4 and paragraph 3 of Part 2 of Schedule 4 and paragraph
2 of Part 3 of Schedule 4.
152
<PAGE>
SCHEDULE 8
----------
UK Pension Transfer Arrangements
--------------------------------
1. Definitions
-----------
In this Schedule the following expressions have the following
meanings unless inconsistent with the context:-
Expression Meaning
---------- -------
"Actuary" A Fellow of the Institute or
Faculty of Actuaries or a body making
available the advice of such a Fellow.
"Actuary's Letter" The letter from the Vendors' Actuary to the
Purchaser's Actuary relating to this Schedule
8 and dated on the date of this Agreement, a
copy of which is annexed hereto.
"Certified Report" A certified report to be prepared by the Vendors'
Actuary in accordance with paragraph 4.1 in
which the Vendors' Actuary shall specify the
sum he calculates to represent the presumed
Transfer Value by reference to all the
Relevant Members who are in pensionable
service on the day preceding the Scheme
Transfer Date and shall set out in
reasonable detail his calculations in
arriving at such sum.
"Employees" All those persons who at
Completion are employed by the English
Group Members
"Final Payment Date" Fourteen days following the latest of (i)
determination of the Transfer Value
pursuant to paragraph 4, or paragraph 7 as
appropriate; (ii) certification and
approval of benefits by the Purchaser's
Actuary and Vendors' Actuary respectively
in accordance with paragraph 2.4 and
paragraph 2.6 and (iii) certification by
the Purchaser's Actuary that in his
opinion the Purchaser's Scheme is 100%
funded on the actuarial assumptions set
out in the Actuary's Letter so far as he
judges that they are reasonably relevant
to the Purchaser's Scheme.
"Interest" Interest at the annual rate of
2 per cent above the base lending rate
from time to time of Barclays Bank plc,
accruing on a daily basis until payment is made,
whether before or after any judgement.
153<PAGE>
"Interim Period" The period commencing on
the day following Completion and expiring
on the day immediately preceding the
Scheme Transfer Date.
"Purchaser's Actuary" Martyn Atkinson of Wm M Mercer Limited,
Three Broadway, Broad Street, Birmingham,
B15 1BQ.
"Purchaser's Scheme" Interface Europe Pension Scheme or such
other retirement benefits scheme
established or to be established by the
Purchasers in accordance with the
provisions of paragraph 2.
"Relevant Members" Such of the Employees as shall be members
in pensionable service under the Vendors'
Scheme as at Completion.
"Scheme Transfer Date" 1st February 1998 or such earlier or later
date as may be agreed in writing between
the Vendors and the Purchasers.
"Transferring Members" Those Relevant Members who remain in
pensionable service under the Vendors'
Scheme until the Scheme Transfer Date and,
for the avoidance of doubt, shall include
such members who cease to be active
members of the Readicut International
Executive Pension Scheme during the
Interim Period but who become members in
pensionable service of the Readicut
International Pension Fund also during the
Interim Period and who consent in writing
in a form acceptable to the Vendors and
the Purchasers to join the Purchaser's
Scheme and within the period of 1 month
after the Scheme Transfer Date consent in
writing to the transfer of their benefits
from the Vendors' Scheme to the
Purchaser's Scheme and in respect of whom
scheme assets and appropriate liabilities
for past service benefits are transferred
from the Vendors' Scheme to the
Purchaser's Scheme in pursuance of this
Schedule 8.
"Transfer Value" Shall be the amount
calculated in accordance with the
Actuary's Letter
"Trustees" The trustees for the time
being of the Vendors' Scheme.
154<PAGE>
"Vendors' Actuary" A Staddon of Bacon & Woodrow, 9 Park Square
East, Leeds, LS1 2LH
"Vendors' Scheme" Such of the Readicut
International Pension Fund and the
Readicut International Executive Pension
Scheme as the context requires and permits
and in respect of a Relevant Member shall
mean the scheme of which he is a member in
pensionable service
2 Purchasers' Undertakings
------------------------
The Purchasers undertake that:-
2.1 during the Interim Period they will cause the Purchaser's Scheme
(if necessary) to be established and that on expiry of the
Interim Period the Relevant Members will be eligible to
participate therein in accordance with the provisions thereof and
the remaining provisions of this Schedule 8;
2.2 the Purchaser's Scheme is or will be established as a final
salary scheme in such a way that it will be approved by the Board
of Inland Revenue for the purposes of Chapter I of Part XIV ICTA
and capable of treatment as an exempt approved scheme for the
purposes of ICTA;
2.3 with effect from the Scheme Transfer Date they will cause
membership of the Purchaser's Scheme to be offered to the
Relevant Members and any other Employee who would otherwise have
been eligible to join the Vendors' Scheme (in a form approved by
the Vendors such approval not to be unreasonably withheld) and
shall provide benefits under the Purchaser's Scheme in respect of
service on and from the Scheme Transfer Date;
2.4 the Purchaser's Scheme will accept a transfer from the Vendors'
Scheme in accordance with the provisions of this Schedule 8 in
respect of the Transferring Members and on receipt of the
Adjusted Transfer Value (as defined in paragraph 4.5) will grant
rights in the Purchaser's Scheme in respect of the Transferring
Members on the basis that the assets representing their accrued
rights to past service benefits under the Vendors' Scheme will be
transferred to the Purchaser's Scheme on a basis as certified by
the Purchaser's Actuary (and agreed by the Vendors' Actuary such
agreement not to be unreasonably withheld) which are at least
equivalent in actuarial value to those past service rights
accrued in the Vendors' Scheme;
2.5 the Purchaser's Scheme will comply with the requirements of the
Pensions Act 1995 regarding the receipt of a transfer value from
the Vendors' Scheme;
2.6 the future benefits provided by the Purchaser's Scheme for the
Relevant Members who become members of the Purchaser's Scheme by
accepting the offer referred to in paragraph 2.3 will in the
reasonable opinion of the Purchaser's Actuary be substantially
similar to those provided (as of right) by the Vendors' Scheme as
at Completion and will be overall broadly comparable in actuarial
value (as certified by the Purchaser's Actuary and agreed by the
Vendors' Actuary, such agreement not to be unreasonably withheld)
155<PAGE>
to those provided as of right under the Vendors' Scheme as at
Completion provided that the Purchasers shall use their
reasonable endeavours to ensure that due and full consideration
is given to the provision of discretionary benefits and provided
further that the foregoing benefit provision shall be subject to
the good faith exercise of powers of amendment and termination.
2.7 for the purposes of paragraph 2.4, and paragraph 2.6 the
valuation of the benefits to be provided under the Purchaser's
Scheme shall be determined in accordance with the assumptions and
methods contained in the Actuary's Letter, and, for the purposes
of paragraph 2.4, 'rights' shall include rights and interests
(including due consideration of the provision of discretionary
benefits).
3 Interim Period
--------------
The following provisions apply in respect of the Interim
Period:-
3.1 the Vendors will procure that the Trustees take all steps
(including obtaining all necessary consents of the Pension
Schemes Office of the Inland Revenue) as are necessary to permit
the Relevant Members and the English Group Members to continue to
participate in the Vendors' Scheme for all pension and death in
service benefits during the Interim Period as members and as if
they were associated employers respectively;
3.2 forthwith following Completion the Purchasers will procure that
the English Group Members will comply with such formalities and
will execute such documents including all appropriate elections
as shall be necessary for the continued participation of the
Relevant Members and the English Group Members in the Vendors'
Scheme;
3.3 the Purchasers will procure the prompt payment to the Trustees at
such intervals during the Interim Period as the Trustees require
in respect of each of the Relevant Members, for so long as he or
she remains in membership of the Vendors' Scheme, of
contributions as follows:-
Readicut International Pension Fund
-----------------------------------
i) 1974 Scheme Members
-------------------
Member's contributions - 5% of pensionable salary
Employer's contributions - 13.5% of pensionable salary
ii) 1978 Scheme Members
-------------------
Member's contributions: - 3% of pensionable salary
156<PAGE>
Employer's contributions - 6.2% of pensionable salary
Readicut International Executive Pension Fund
---------------------------------------------
Member's contributions - 5% of pensionable salary
Employer's contributions - 13.5% of pensionable salary
pensionable salary being the earnings applicable in the
provisions of the Vendors' Scheme relating to the Relevant
Members concerned or any other amounts or rates required in order
to comply with their obligations under the Pensions Act 1995; and
in the event that contributions payable under this paragraph 3.3
are received by the Trustees after the due date for payment
(being 14 days after the end of the month to which they relate)
an amount equal to the contribution plus Interest thereon will be
payable by the Purchasers from the due date for payment to the
date of actual payment;
3.4 the Purchasers will procure that each of the English Group
Members will comply during the Interim Period with the provisions
of the Vendors' Scheme insofar as they apply to them as if they
were associated employers and in particular will:-
3.4.1 comply with all requirements of the Pensions Act
1995 applicable to them and nominate the principal employer
of the Vendors' Scheme as:-
3.4.1.1 the employer capable of agreeing the schedule of
contributions for the purposes of the Act;
3.4.1.2 the appropriate person (as defined in Schedule 3 to
the Occupational Pension Schemes (Member-Nominated
Trustees and Directors) Regulations 1996) for the
purposes of proposing existing arrangements or the
adoption of new arrangements for selecting the
trustees of the Vendors' Scheme; and
3.4.1.3 the representative for the purposes of preparation
of a statement of investment principles under the
Act (and, in addition, will notify the Trustees
that they need not be consulted regarding the
statement of investment principles);
3.4.2 not exercise any right power or discretion conferred
on them as participating employers in the Vendors' Scheme
without the prior written consent of the Vendors, such
consent not to be unreasonably withheld;
3.4.3 not increase the remuneration above 6 1/2 per cent per
annum of the gross earnings in the twelve months up to and
including Completion applicable to the Relevant Members as
at Completion, except those who become Transferring Members,
except on such terms as to payment of additional
contributions to the Vendors' Scheme as the Vendors and the
Trustees may reasonably require;
157<PAGE>
3.4.4 procure that the English Group Members will
terminate their liability to contribute to the Readicut
International Executive Pension Scheme (under Rule 32.1.3 of
the Rules of that scheme) if reasonably requested to do so
by the Vendors; and
3.4.5 procure that the English Group Members will assist
in terminating membership of the Readicut International
Executive Pension Scheme, offering membership of the
Readicut International Pension Fund and effecting transfers
of assets and liabilities between the two schemes in respect
of Relevant Members.
3.5 3.5.1 if, during the Interim Period any Relevant Member
claims an early retirement pension (following termination of
his contract of employment where retirement is as a result
of a request by one of the English Group Members or by
reason of redundancy); or
3.5.2 if, during the Interim Period the number of Relevant
Members claiming early retirement pensions (following
termination of their contracts of employment where
retirement is for any other reason) exceeds one per calendar
month.
then the Purchasers will make, or shall procure that such of the
English Group Members which is the relevant employer will make
such additional contributions to the Vendors' Scheme as the
Vendors and the Trustees may reasonably require to cover the
additional cost thereof to the Vendors' Scheme, provided that, if
the Purchasers or the English Group Members fail to pay such
additional contributions by the Final Payment Date, the Transfer
Value will be reduced by the amount of the additional
contributions payable under this paragraph 3.5.
4 Transfer Value
--------------
4.1 The Purchasers will provide or cause to be provided to the
Vendors' Actuary all such information within 60 days of the
Scheme Transfer Date as the Vendors' Actuary reasonably requires
as to the Relevant Members to enable him to complete the
Certified Report. The Vendors will procure that subject to the
provisions of this paragraph:-
4.1.1 the Vendors' Actuary will within 30 days after the
later of (i) the Scheme Transfer Date and (ii) provision by
the Purchasers of the information referred to in the first
sentence of this paragraph 4.1, prepare the Certified
Report; and
4.1.2 a copy of the Certified Report will be delivered to
the Purchaser's Actuary as soon as the same is available
accompanied by such additional information as is referred to
in paragraph 6.3.
4.2 In the event that the Purchaser's Actuary agrees the sum
specified by the Vendors' Actuary on the basis of the Certified
Report (or in the event that the Purchaser's Actuary fails
within 30 days or such longer period as the parties may agree
following service on him of the Certified Report to serve notice
on the Vendors' Actuary and/or the Vendors that he disagrees with
such sum) then such sum as is specified by the Vendor's Actuary
158<PAGE>
in the Certified Report in relation to the Transferring Members
will be the Transfer Value for the purposes of this Schedule 8
and will be binding on the parties hereto.
4.3 In the event that the Purchaser's Actuary does not agree the
Transfer Value under paragraph 4.2 then the Vendors and the
Purchasers will procure that the Purchaser's Actuary and the
Vendors' Actuary negotiate with a view to resolving any
differences, but in default of agreement within the period of 30
days following service on the Purchaser's Actuary of the
Certified Report then the calculation of the Transfer Value may
be referred to an independent actuary for determination on the
application of any party in accordance with the provisions of
paragraph 7.
4.4 In the event that the Vendors' Actuary and the Purchaser's
Actuary agree the sum representing the Transfer Value on the
basis of the Actuary's Letter, then the Vendors and the
Purchasers will procure that forthwith following such agreement
the Vendors' Actuary and the Purchaser's Actuary will issue a
joint certificate as to such figure which joint certificate shall
for the purpose of this Schedule 8 be binding on the parties
hereto.
4.5 Subject to the consent of the Board of Inland Revenue Pension
Schemes Office (which consent the Vendors and the Purchasers
hereby undertake to use their respective reasonable endeavours to
obtain) and, subject to the Trustees of the Purchaser's Scheme
signing a discharge in a form approved by the Vendors and the
Trustees, the Vendors will use all reasonable endeavours to
procure payment by the Trustees to the Trustees for the time
being of the Purchaser's Scheme by the Final Payment Date of an
amount in cash (or such other assets as may be agreed between the
Trustees and the Trustees of the Purchaser's Scheme) equal to the
Transfer Value adjusted for the period from the Scheme Transfer
Date to the Final Payment Date (both dates exclusive) in the
manner set out in the Actuary's Letter ("the Adjusted Transfer
Value") PROVIDED THAT the Adjusted Transfer Value may be paid to
the Trustees of the Purchaser's scheme by one or the other or
both of the Trustees of the Readicut International Pension Fund
and the Readicut International Executive Pension Scheme in such
proportions as the Vendors and the Trustees see fit.
4.6 For the purposes of calculating the Transfer Value, it is agreed
that, in respect of any Transferring Member who was an active
member of the Readicut International Executive Pension Scheme as
at Completion,
i) his only or last period of continuous pensionable service
(if any) under the Readicut International Pension Fund up to
5th April 1997;
ii) his period of pensionable service under the Readicut
International Executive Pension Scheme from 6th April 1997
to Completion; and
iii) any period or periods of continuous pensionable
service within either Vendor's Scheme from Completion to the
Scheme Transfer Date,
159<PAGE>
shall be regarded as one period of pensionable service (but so
that no period shall count double).
5 Vendors' Undertaking
--------------------
The Vendors undertake with the Purchasers that:-
5.1 those of the Relevant Members who do not become Transferring
Members will be provided with such benefits and options as may be
provided for in the rules of the Vendors' Scheme;
5.2 they will not at any time during the Interim Period do, commit or
authorise any action which would cause the Readicut
International Pension Fund to be terminated or amended (save as
required to comply with legislation or so as to preserve Inland
Revenue exempt approval) in any way which would prejudice the
benefits prospectively and contingently payable to and in respect
of the Relevant Members in respect of their participation up to
the Scheme Transfer Date;
5.3 all such information in respect of the Vendors' Scheme and/or the
Relevant Members as the Purchasers or the Purchaser's Actuary may
for the purpose of this Schedule 8 reasonably request will be
made available by the Vendors and/or the Trustees to the
Purchasers and/or the Purchaser's Actuary; and
5.4 the Trustees will not admit to the Vendors' Scheme any Employees
who are not Relevant Members other than those who become eligible
during the Interim Period.
6 Shortfall
---------
6.1 If, at the Final Payment Date, the amount paid by the Trustees to
the Trustees of the Purchaser's Scheme is less than the the
Adjusted Transfer Value calculated in accordance with paragraph
4.5, the Vendors shall within 30 days of the Final Payment Date
pay to the Purchaser the amount in cash equal to 69% (or such
other per cent as may correspond to 100% minus the rate of
corporation tax payable (not being the Small Companies rate) in
the tax year in which the Shortfall (as defined below) is
received by it) of the difference between the Adjusted Transfer
Value and the actual amount paid across (such amount being known
as "the Shortfall") together with Interest from the Final Payment
Date to the date payment is actually made under this paragraph 6.
The Purchasers undertake that on receipt of any such payment they
will immediately pay or procure the payment of an amount equal to
the Shortfall to the Purchaser's Scheme.
7 Resolution of Disputes
----------------------
In default of agreement by the Vendors' Actuary and the
Purchaser's Actuary as to the Transfer Value then a party wishing
to invoke his rights under paragraph 4.3 will first serve notice
on the other parties to the Agreement of the amount he considers
to represent the Transfer Value, following which the matter in
dispute will be referred for final determination to an
independent Actuary who, unless otherwise agreed, will be an
Actuary nominated by the President for the time being of the
160<PAGE>
Institute of Actuaries and who, in making such determination,
will be deemed to be acting as an expert and not as an arbitrator
and whose decision will in the absence of manifest error be final
and binding on the parties. The costs of any such expert will be
borne equally between the Vendors and the Purchasers.
8 Not to Encourage Action
-----------------------
The Purchasers, or any company directly or indirectly controlled
or connected with the Purchasers, will not encourage or initiate
or assist or facilitate any action or provide any financial
assistance for the purpose of requiring the Vendors' Scheme to
pay an amount larger than the Adjusted Transfer Value to the
Purchaser's Scheme in respect of the Transferring Members.
9 Additional Voluntary Contributions
----------------------------------
Nothing previously contained in this Schedule will apply to
Transferring Members' voluntary contributions or to benefits
secured by them. However, the Vendors will use all reasonable
endeavours to ensure that the assets representing the additional
voluntary contributions of Transferring Members will be
transferred to the Purchaser's Scheme and the Purchasers will
ensure that in that event the Purchaser's Scheme provides broadly
equivalent benefits for the Transferring Members concerned.
10 Indemnity
---------
The Vendors agree to indemnify the Purchasers in respect of any
liability to make any payment to the Vendors' Scheme pursuant to
section 75 of the Pensions Act 1995 or any undischarged liability
pursuant to Regulation 3 of the Occupational Pensions Schemes
(Deficiency on Winding Up etc) Regulations 1996, and against any
actions, demands, proceedings, claims and costs brought or made
against or incurred by the Purchasers in connection with those
liabilities provided that the foregoing indemnity shall not
operate to the extent that those liabilities are attributable in
full or in part to any failure to pay the contributions set out
in paragraph 3.3.
161
<PAGE>
SCHEDULE 9
----------
Trade Names
-----------
1. Joseph Hamilton & Seaton Limited
--------------------------------
Albatross
Amalfi Tiles
Ballantrae
Ballantrae Classic
Barrier Back
Bond Street
Boston Park
Calliope
Capri Tile
Cartel
Commendation
CommissionnaireII
Commissionnaire
Consortium
Declaration
Dossier
Duo Mat
Eagle
Edgewater
Endurance II
Endurance
Equity
Florence
Florence Tiles
Governor
Grand Master
Grid Iron
Hawthorn
Heather Tones 2000
Heather Tones II
Heather Velvet
Heather Tones Tiles
Heather Tones V
Heritage Place
Highlands
Hospicare
Hospi Loop
Hospi-Lux
Hospi-Supreme
Hospi-Safe
162<PAGE>
Hospi-Super
Hospi-Twist
Hospi-Plus BB
Imagery II
Invertec
Inverness II
Jet
Klondyke
Medici Tiles
Microlites
Misc JHS Carpet
Orion
Panama
Portfolio
Prime Contender
Random Diamonds II
Ravello Tiles
Rimini
Siena Tiles
Starlight
Tilburg
Town Square
Tretford 1mtr
Tretford 2mtr
Tretford Tiles
Trio Mat
Twill Tones II
Uno Mat
Valencia
Vegas
Velvet Link
Venice
Verdi Tiles
Verona Tiles
Westchester
York
2. Firth Carpets Limited
---------------------
Firth Carpets
Axminster Domestic Stock Ranges:
Buckingham
Tufted Domestic Stock Ranges:
163<PAGE>
Drury Lane
Super Drury Lane II
Extra Super Drury Lane II
Strata
Hyde Park
Super Hyde Park
Tufted Contract Stock Ranges:
Multi-Tex Collection
Firthtech
Carewear
Everywear
Colourspun Heather
Chancery
Chancellor
Intrepid
Firthshield
Club Selection Spike Proof Carpet
Albany
Custom Tufted Contract:
Graphic
Hydrashift
ICN
Colortec
Tufted Contract Tile Ranges:
Trojan
Firthtech
Cosmopolitan
The Masters Collection:
Seurat
Rousseau
Goya
Rembrandt
Lautrec
Degas
Axminster Contract Stock Ranges:
Westminster
164<PAGE>
Images
Axminster Custom Contract Stock Ranges:
250s Woven Axminster
338s Woven Axminster
Firthguard Spikeproof
Wilton Custom Contract Ranges:
250s Woven Wilton
3. Network Flooring
----------------
PCL Network Flooring
Network Flooring Derby
Armada Network Flooring
Network Flooring Plymouth
Chris Wright Network Flooring
Network Flooring Newcastle
Network Flooring London
Dunns Network Flooring Warrington
Network Flooring Warrington
Dunns Network Flooring Leeds
RLH Network Flooring
Network Flooring Glasgow
G&I Network Flooring
Network Flooring Cardiff
Murrays Network Flooring
Network Flooring Head Office
Network Flooring Europe
165
<PAGE>
Dutch and German Trade Names
----------------------------
Kwaliteit
---------
Berber
Broadway-Nop
Con.Pat.Rib
Castille
Diamant
Fino
Karaat
Mabo
Montblanc
Montblanc-Nop
Odil
Prima-Wave
Proud
Ribco
Regency
Robusta
Toronto
Brush
Ceasar
Classique
Fontana
Pastel
Onbenoemd Handelstapijt
Laminaat Hulhiddelen
Onbenoemd Lahinaat
Onbenoemd EMS-Plan
Onbeneomd Kwal.Tuft (ST)
Onbeneomd Kwal.Vuilv
Grondstoffen Backing En P
Verpakkingskosten Inkooop
Werk Voor Derden Overig
Grondstof Nul Serie Produ
Handels Artikelen
B. Keuze Credit Naaldvilt
B. Keuze Debet Vuilvang
Opruimers - Naaldvilt Credit
Opruimers - Naaldvilt Debet
Opruimers Tuft Debet
166<PAGE>
Opruimers - Vuilvang Debet
Voorlopers
Accent
Arena (Bug)
Azvor (Bug)
Arcos
Artico
Artiba (Bug)
Armani
Arasola (Bug)
Benti (Bug)
Buggy (Bug)
Basic-Nop
Boston
Brisant (Bug)
Blues (Bug)
Basci 1
Barati (Bug)
Capri
Caresse
Carre
Color
Colorit
Colorit-Blok
Colorit-Diagonaal
Coma
Corsa
Cord
Delmok (Bug)
Decor
Disco (Bug)
Dorint (Bug)
Estrada
Elite
Euro
Fashion
Favorit
Fortus
Gazon
Gezet
Globe
Green
Goldstar
Gobi
167<PAGE>
Gibson
Grizzly
Houston
Hamburg
Heuga
Hampstead
Junior
Kingston
Kardi
Karazon
Lanstone (Bug)
Laser
Lido
Liverpool
Line
Limit
Madras
Marina
Mars
Matador
Metro
Montreal
Mercury
Markazon
Mansion
Morgana
Novadura
Novanop
Novawave
Novazon
Novalux
Novazon-Colors
Noblesse(Bug)
Orion
Osaka
Ottawa
Pacific
Pisa
Prima-Diagonaal
Pavillion
Point
Quick
Rambo
Riva
Rocky
Robuust
168<PAGE>
Runway
Racket-Nop
Robuust-Vlak
Ravissant
Ravelli
Rebis
Rubin (Bug)
Racoon
Serbi (Bug)
Spartaan
Sunfloor
Star
Swing
Scraper
Square
Structur
Style
Sweena (Bug)
Swazi (Bug)
Sjeed (Bug)
Speedy (Bug)
Sahara
Stage
Stallone (Bug)
Saphir (Bug)
Terrace
Tex
Tokyo
Trio
Troika
Terra-Dilour
Tosion
Top (Bug)
Topas (Bug)
Unu
Univers-Diagonaal
Universe Blok
Viscount
Versailles
Windsor
Wicket
Nalldvilt Proef
Onbenoemde Kw. N.
B. Keuze Debet Nan
Aquila
169<PAGE>
Antares
Balmoral
Basalt
Castor
Cairo
Corona
Delphi
Ericsa
Geneve
Gemini
Hanza
Kos
Levkas
Menuett
Pulsar
Quasar
Ranger
Rhapsody
Roma
Saturn
Staccato
Sparti
B. Keuze Debe
Color-plus
Clean
Entrada
Entrada-BA
Intro
Ideal
Inova
Luxor
Neptunus
Plus
Progress
Scorpio
Sofia
Stripe
Duo Print O3
Duo Print 05
Defense Rug 01
Defense Rug 02
Defense Rug 03
Defense Rug 05
Defense Rug 06
Duo-Vlak Code DVO3
170<PAGE>
Edel Foam 01
Edel Foam 03
Edel Foam 04
Edel Foam 05
Edel Foam 06
Edel Foam 07
Edel Foam 08
Foam Code FMO1
Foam Code FMO3
Foam Code FMO5
Foam Code FMO6
Foam Code FMO8
Foam Code FMO9
Foam Code FMO11
Foam O3 OP Technisch Weef
Impervious GB 03
Impervious GB 05
Jute Code JE12
Jute Code JE18
Kleine NOP NOO2
Kleine NOP Code NOO4
Grote NOP NPO6
Ondertaprijt Polyback
PVC 2000 Gram
PVC 2200 Gram
PVC 2700 Gram
Precoat Duo Back 03
Pacific Groen 01
Pacific Groen 02
Pacific Groen 04
Pacific WIT 01
Pacific WIT 02
Pacific WIT 04
Pacific Beige 02
Ribbel Roam 03
Florisol
Lastalino
Sisal Gripper 02
Scraper Gripper 03
Sisal-Jute 02
Sisal-Jute 03
Sisal-Jute 05
Sisal-Jute 22 (Eigen Jute)
Sisal-Jute 25 (Eigen Jute)
Sisal Katoen 03
Sisal Katoen 22 (Eigen KA)
171<PAGE>
Scraper Precoat 03
Thio Code THO1
Thio Code THO2
Thio Code THO3
Thio Code THO5
Thio Code THO6
Thio Code THO8
Thio Code TH13
Thio Code TH15
Thio Code TH18
Thio/Mat-Backing
Tuften Voor Derde
Duo-Bross
Duo-Mat
Super-Scraper
Traffic
Trio-Mat
Excellent Laminaat
Premium Laminaat
Prominent Laminaat
Easy Laminaat
172<PAGE>
SCHEDULE 10
-----------
Environmental Indemnities
-------------------------
For the purposes of Clauses 1 and 2 of this Schedule:-
"Environmental Law" has the meaning given thereto in Schedule 4 Part 1;
"Hazardous Substances" means any substance which alone or in
combination with any other substance is capable of causing harm or
damage to property or man or any other organism supported by the
Environment;
"the Indemnified Sites" means Site 2 and Site 3;
"Site 2" means the property detailed at paragraph 1.1.1. of Part 1 of
Schedule 3;
"Site 3" means the property detailed at paragraph 1.1.4. of Part 1 of
Schedule 3.
"the Leased Site" means Site 1 - the property the subject of the
Lease.
1. SITES 2 & 3
-----------
1.1 The First Vendor agrees to indemnify and hold harmless the
Company and the Purchasers and their officers, directors and
employees against and in respect of all losses, damages,
liabilities, costs and expenses which may arise under
Environmental Law which relate to:-
1.1.1 the state or condition of the Indemnified
Sites at Completion; or
1.1.2 the presence at Completion of any Hazardous
Substances in on or under the Indemnified
Sites
173<PAGE>
and which are attributable to the acts or activities of the
Company the Vendors or their officers directors and
employees prior to Completion ("Losses").
1.2 Without prejudice to the generality of clause 1.1 above, the
First Vendor agrees to indemnify the Company and the
Purchasers against the cost of any investigation (including
intrusive investigations) at the Indemnified Sites which is
reasonably carried out by the Company and/or the Purchasers
after Completion for the purpose of ascertaining the state
or condition of the Indemnified Sites at Completion or the
presence of any Hazardous Substances in on or under the
Indemnified Sites at Completion.
1.3 The Company and the Purchasers hereby undertake to:-
1.3.1 Inform the First Vendor in writing as soon as
reasonably practicable upon becoming aware of
any claim being made or contemplated against
the Company or the Purchasers which may be
the subject of a claim under the indemnity in
this Clause 1 (an "Environmental Claim");
1.3.2 Keep the First Vendor informed of all
material developments in relation to the
matter or circumstance giving rise to the
Environmental Claim;
1.3.3 Consult with the First Vendor as to the
appropriate steps to be taken in relation to
the matter or circumstance giving rise to the
Environmental Claim and not settle, agree or
compromise any liability or claim to which
the Environmental Claim relates without the
prior written consent of the First Vendor
(such consent not to be unreasonably withheld
or delayed).
<PAGE>
1.4 The Company and the Purchasers acknowledge and agree that
the First Vendor shall not be liable under this Indemnity to
the extent that (but for the avoidance of doubt only to the
extent that) any Losses are caused or aggravated or
increased in any way after Completion by the acts or
activities of the Company or the Purchasers or their
respective officers, employees, agents and contractors.
1.5 The First Vendor shall not be under any liability in respect
of any Environmental Claim unless written particulars of the
Environmental Claim (giving reasonable details of the
specific matter in respect of which such Environmental Claim
is made) shall have been given to the First Vendor within a
period of seven years from the date of this Agreement.
1.6 The First Vendor shall be under no liability in respect of
any claim pursuant to the indemnity in this clause 1
relating to or arising in any way from the Indemnified Sites
unless the aggregate amount of the First Vendor's liability
arising out of all such claims is in excess of (BT.PD)1,500,000
(one million and five hundred thousand pounds) whereupon the
First Vendor shall be liable only for the excess over
(BT.PD)1,500,000.
1.7 This indemnity shall not in any circumstances extend to
relocation costs or loss of profits or any form of
consequential loss.
1.8 The aggregate liability of the First Vendor in respect of
any and all claims under the indemnity in this clause 1
shall be limited to (BT.PD)30,000,000 (thirty million pounds).
1.9 The Purchasers and the Company shall permit the First Vendor
and its representatives and agents to have access to the
Indemnified Sites for the purpose of inspecting the same and
undertaking such tests on and taking such samples from the
Indemnified Sites as the First Vendor shall reasonably
require in order to obtain or endeavour to obtain insurance
in relation to issues relating to or arising from the
Indemnified Sites and shall provide (at the First Vendor's
cost) copies of all documentation and information relevant
thereto as the First Vendor shall reasonably require.
Provided always that the First Vendor shall indemnify the
Company and the Purchasers against all losses, damages,
liabilities costs and expenses which may arise as a result
of the First Vendor its representatives and/or its agents
undertaking such inspections and tests and taking samples as
aforesaid.
175<PAGE>
2. SITE 1
------
2.1 The First Vendor agrees to indemnify and hold harmless the
Company and the Purchasers and their respective officers,
directors and employees against and in respect of all
losses, damages, liabilities, costs and expenses which may
arise under Environmental Law which relate to:-
2.1.1 the state or condition of the Leased Site at
Completion; or
2.1.2 the presence at Completion of any Hazardous
Substances in, on or under the Leased Site
and which are attributable to the acts or activities of the
Company the Vendors or their respective officers,
directors and employees prior to Completion ("Site 1
Losses").
2.2 The Company and the Purchasers shall as soon as reasonably
practicable:-
2.2.1 inform the First Vendor in writing upon the
Company or the Purchasers becoming aware that
a claim is being made or is contemplated in
respect of which the First Vendor is or may
be liable to make any payment in respect of
any claim under the indemnity in this Clause
2;
176<PAGE>
2.2.2 thereafter keep the First Vendor informed of
all developments in relation thereto; and
2.2.3 provide at the cost of the First Vendor all
such information and documentation (no matter
how it is recorded or stored) in relation
thereto as the First Vendor shall reasonably
request in connection therewith.
2.3 The Company and the Purchasers shall:
2.3.1 (subject to the Company and the Purchasers
receiving a satisfactory indemnity as to
reasonable costs and expenses of the Company
and the Purchasers from the First Vendor)
take all such action as the First Vendor may
request including the instruction of
professional advisers approved by the First
Vendor to institute proceedings or avoid,
dispute, resist, compromise, defend or appeal
against any statutory notice, obligation,
order or other requirement or claim or to
make recovery from a third party (as the case
may be) in accordance with the instructions
of the First Vendor to the intent and effect
that such action shall be delegated entirely
to the First Vendor which shall have full
conduct of any negotiations proceedings or
appeals incidental thereto;
2.3.2 not settle or compromise any liability or
claim to which such action is referable
without the prior written consent of the
First Vendor; and
2.3.3 promptly pay to the First Vendor an amount
equal to any amount recovered from any third
party under the provisions of clause 2.3.1.
<PAGE>
2.4 The First Vendor's liability in respect of any claim under
the indemnity in this clause 2 shall be reduced
proportionately to the extent that the loss or damage giving
rise to the claim has been recovered by the Company or the
Purchasers under any policy of insurance.
2.5 The First Vendor shall not be liable under this Indemnity to
the extent that (but for the avoidance of doubt only to the
extent that) any Site 1 Losses for which a claim is made
under this Indemnity are accelerated or increased or caused
in any way by the acts or activities of the Company or the
Purchasers or their respective officers, employees, agents
or contractors.
2.6 The indemnity in this clause 2 does not extend to relocation
costs, loss of profits or any form of consequential loss.
2.7 The First Vendor shall not undertake or permit to be
undertaken any form of site investigation which involves the
taking of samples or the investigation of the soil or the
subsoil or ground water at the Leased Site without the prior
written consent of the Landlord (such consent not to be
unreasonably withheld) except where the Company and/or the
Purchasers are required to do so by any Environmental Law or
other Law.
2.8 The Company and the Purchasers shall refer to the Landlord
any enquiries or concerns from any third party regarding the
state and condition of the Premises or the presence of any
Hazardous Substances in on or under the Premises and shall
not directly or indirectly give information regarding the
same to any regulatory authority other than where it is
required to do so by any Environmental Law or other Law.
3. It is acknowledged and agreed between the parties that the
disclosure against the Warranties of environmental reports
prepared by Aspinwalls in November 1997 in relation to the
Indemnified Sites and the Leased Site shall not in any way
preclude a claim being made by the Company or the Purchasers
pursuant to the indemnities in clauses 1 and 2 of this
Schedule.
178
<PAGE>
SIGNED by BRIAN LECKIE ) /s/ B Leckie
duly authorised for and on behalf of )
READICUT INTERNATIONAL PLC )
in the presence of:- )
Witness's signature: /s/ P H Scrivener
Name: P H SCRIVENER
Address: CLOTH HALL COURT
INFIRMARY STREET
LEEDS LS1 2JB
Occupation: SOLICITOR
SIGNED by BRIAN LECKIE ) /s/ B Leckie
ALLAN THOMPSON ) /s/ A L Thompson
duly authorised for and on behalf of )
READICUT NETHERLANDS B.V. )
in the presence of:- )
Witness's signature: /s/ P H Scrivener
Name: P H SCRIVENER
Address: AFORESAID
Occupation:
180<PAGE>
SIGNED by JOHN LESLIE PARTRIDGE ) /s/ J L Partridge
duly authorised for and on behalf of )
INTERFACE EUROPE LIMITED )
in the presence of:- )
Witness's signature: /s/ A J Da Costa
Name: Alastair Da Costa
Address: 117 The Headrow, Leeds
Occupation: Solicitor
181
<PAGE>
SIGNED by JOHN LESLIE PARTRIDGE ) /s/J L Partridge
duly authorised for and on behalf of )
INTERFACE EUROPE B.V. )
in the presence of:- )
Witness's signature: /s/ A J Da Costa
Name: Alastair Da Costa
Address: 117 The Headrow, Leeds
Occupation: Solicitor
182
<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 April 5, 1998, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000715787
<NAME> INTERFACE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> JAN-03-1998
<PERIOD-END> APR-05-1998
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<RECEIVABLES> 192,258
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<INVENTORY> 191,646
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0
0
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