INTERFACE, INC. RESTRICTED STOCK AGREEMENT
Exhibit
10.5
INTERFACE,
INC.
This
Restricted Stock Agreement (this “Agreement”) is entered into as of the _____
day of ____________, 20___, by and between Interface, Inc. (the
“Company”) and ________________ (“Grantee”).
W I T N E S S E T
H:
WHEREAS, the Company has
adopted the Interface, Inc. Omnibus Stock Incentive Plan (the “Plan”) which is
administered by a committee appointed by the Company's Board of Directors (the
“Committee”); and
WHEREAS, the Committee has
granted to Grantee an award of Restricted Shares under the terms of the Plan
(the “Award”) to encourage Grantee=s continued
loyalty and diligence; and
WHEREAS, to comply with the terms
of the Plan and to further the interests of the Company and Grantee, the parties
hereto have set forth the terms of the Award in writing in this
Agreement.
NOW, THEREFORE, for and in
consideration of the mutual promises herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1) Plan
Provisions.
In
addition to the terms and conditions set forth herein, the Award is subject to
and governed by the terms and conditions set forth in the Plan, which are hereby
incorporated herein by reference. Any terms used herein with an
initial capital letter shall have the same meaning as provided in the Plan,
unless otherwise specified herein. In the event of any conflict
between the provisions of this Agreement and the Plan, the Plan shall
control.
2) Stock
Award.
Effective
on _____________, 20___ (the “Grant Date”), and subject to the restrictions and
other conditions set forth herein, the Committee granted to Grantee an Award of
______ Shares of the Class B common stock, $.10 par value per share, of the
Company; provided, however, that if all of the outstanding Class B Shares of the
Company are converted into Class A Shares, then Class A Shares shall be
substituted for the Class B Shares granted hereunder. Such Shares
granted are hereinafter sometimes referred to as the “Restricted
Shares.” The Fair Market Value of each Restricted Share awarded on
the Grant Date was $________.
3) Vesting
Restrictions.
(a) General. All or a
portion (as applicable) of the Restricted Shares will vest and no longer be
subject to forfeiture if one of several criteria is satisfied. As
described below, these criteria are based on Company performance (i.e.,
increasing the Company’s earnings per share plus dividends), Grantee=s tenure of
employment, the occurrence of a Change in Control (as defined in subsection (d)
hereof), and/or certain events resulting in termination of Grantee=s employment
with the Company.
(b) Performance. The Restricted
Shares shall vest to the extent that the performance vesting criterion specified
herein is achieved. The performance vesting criterion is an increase
in annual “EPSD” (earnings per share achieved by the Company plus dividends
declared and paid by the Company) from a baseline EPSD of $____ ($___ earnings
per share, plus $__ dividends) measured against a target EPSD of
$____. The performance period is a three-year period – fiscal ____,
____ and ____ – with a performance measurement and vesting opportunity as of the
end of each fiscal year when the audited financial results are reviewed with the
Company’s Board of Directors (typically at a regular meeting of the Board each
February). The vesting of Restricted Shares for each annual period
will be pro rata based on the degree to which the performance target has been
achieved. For example, if fiscal ____ EPSD were $____, then Grantee
would at that time become vested in __% of the Restricted Shares (since __% of
the $__ “spread” between the $____ EPSD baseline and the $____ EPSD target would
have been achieved). A similar vesting opportunity will occur for
fiscal ____ and fiscal ____ EPSD performance, but only to the extent the
“spread” between the baseline EPSD and target EPSD has not previously been
achieved. At such time, relative to the three-year performance
period, as the $____ EPSD target may be exceeded, additional restricted
shares (the “Additional Shares”) will be issued to Grantee based on the degree
to which the three-year EPSD target is exceeded. For example, if
fiscal ____ EPSD were $____, any previously unvested Restricted Shares would
vest, and Additional Shares, in the amount of __% of the original award
hereunder, would be issued to Grantee for the over-performance (as ___% of the
$___ spread between the $____ EPSD baseline and $____ EPSD target would
have been achieved).
(c) Tenure of
Employment. Subject to the
following sentence of this subsection (c), if Grantee remains continuously
employed by the Company or any of its Subsidiaries until the five-year
anniversary of the Grant Date, 50 percent of the Restricted Shares granted
hereunder will vest on said date and no longer be subject to forfeiture
(and the balance of the Restricted Shares granted hereunder that have not
previously vested will be forfeited). Notwithstanding the foregoing,
the Restricted Shares eligible to time vest on the five-year anniversary of the
Grant Date will be reduced, share for share, by the number of shares that
performance vest (pursuant to subsection (b) hereof) during the three-year
performance period. (Thus, if at least 50% of the Restricted Shares
performance vest in connection with the three-year performance period, there
will be no Restricted Shares eligible to time vest under this
subsection.)
(d) Change in
Control. If a Change in Control (as defined below) occurs at
any time prior to, or within 30 days following, the five-year anniversary of the
Grant Date, any Restricted Shares granted hereunder that have not yet vested
will do so on the date of the Change in Control, and Grantee thereupon will
become vested in all such Restricted Shares. For purposes
hereof:
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(x) “Change in Control” shall
mean the earliest to occur of:
(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 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 Xxx X. Xxxxxxxx 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.
(y) “Permitted Holders” shall
mean Xxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, and X.
Xxxxx Xxxxxx, II; 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.
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(e) Partial
Vesting Upon Certain Events of Termination. Upon the date
that Grantee=s employment
with the Company and its Subsidiaries terminates as a result of (i)
an involuntary termination at the request of the Company (or the
Subsidiary that is Grantee=s employer)
for any reason other than Cause (as defined in subsection (f)(i) hereof), (ii)
Grantee=s Disability
(as defined in subsection (f)(ii) hereof), (iii) Grantee=s death, or
(iv) Grantee=s retirement
upon or after attaining age 65, a portion of the Restricted Shares that have not
yet vested will do so on such date, and Grantee thereupon will become vested in
such portion of the Restricted Shares. The portion of Restricted
Shares that shall vest will be equal to the product of (x) 50 percent of the
Restricted Shares granted hereunder, and (y) a fraction, the numerator of which
is the number of full and partial 12-month periods that have elapsed since the
Grant Date (with any partial 12-month period treated as a whole 12-month
period), and the denominator of which is five; provided, however, that such
portion of Restricted Shares eligible to vest under this subsection will be
reduced, share for share, by the number of shares that performance vest
(pursuant to subsection (b) hereof) during the three-year performance
period. (Thus, if at least 50% of the Restricted Shares granted
hereunder performance vest in connection with the three-year performance period,
there will be no shares eligible to vest under this subsection.)
(f) Cause and
Disability. As used herein,
the following terms shall have the meanings ascribed to such terms as set forth
below:
(i) Cause. The
term “Cause” shall mean the reason for termination of Grantee=s employment
is (A) Grantee=s fraud,
dishonesty, gross negligence or willful misconduct, with respect to business
affairs of the Company or its Subsidiaries, (B) Grantee=s refusal or
repeated failure to follow the established lawful policies of the Company or its
Subsidiaries applicable to persons occupying the same or similar positions, or
(C) Grantee=s conviction
of a felony or other crime involving moral turpitude.
(ii) Disability. The
term “Disability” shall mean Grantee=s inability,
as a result of physical or mental incapacity, to substantially perform
Grantee=s duties for
the Company and its Subsidiaries on a full-time basis for a continuous period of
six months. The Committee, in its sole discretion, shall make all
determinations as to whether or not Grantee has incurred a Disability, and the
Committee=s
determination shall be final and binding.
4) Forfeiture
Upon Resignation or Termination for Cause.
If
Grantee voluntarily resigns from employment with the Company and all of its
Subsidiaries, or if the Company or the Subsidiary that is Grantee=s employer
terminates Grantee=s employment
for Cause (as defined in Section 3(f)(i) above), any Restricted Shares that are
not then vested under any provision of Section 3 shall be immediately forfeited,
and Grantee shall have no rights in such Restricted Shares.
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5) Delivery
of Stock Certificate.
Within a
reasonable time after the date hereof, the Company shall cause the Restricted
Shares to be registered in the name of Grantee, subject to the risk of
forfeiture set forth in Sections 3 and 4 hereof. Grantee may not
sell, assign, transfer or pledge any Restricted Shares prior to the date on
which the possibility of forfeiture with respect to such Shares has
lapsed. During the period that any Restricted Shares remain subject
to a risk of forfeiture under Sections 3 and 4 hereof, the Company may retain
possession of the certificate representing such Shares as a means of enforcing
such restrictions.
6) Acknowledgment
of Grantee.
Grantee
acknowledges that certain restrictions under state, federal or foreign
securities laws may apply with respect to the Restricted Shares (and any
Additional Shares) granted pursuant to the Award. Grantee
further acknowledges that, to the extent Grantee is an “affiliate” of the
Company (as that term is defined by the Securities Act of 1933), the Restricted
Shares (and any Additional Shares) granted as a result of the Award are subject
to certain trading restrictions under applicable securities laws (including,
particularly, Rule 144 under the Securities Act). Grantee hereby
agrees to execute such documents and take such actions as the Company may
reasonably require with respect to state, federal and foreign securities laws
applicable to the Company and any restrictions on the resale of such Shares
which may pertain under such laws. The Company has registered (or
intends to register) the securities represented by the Restricted Shares
(including any Additional Shares); however, in the event such registration at
any time is ineffective or any special rules apply, such securities may be sold
or transferred only in accordance with the Plan and pursuant to additional,
effective securities laws registrations or in a transaction that is exempt from
such registration requirements. If appropriate under the
circumstances, the certificate(s) evidencing the Restricted Shares (and any
Additional Shares) shall bear a restrictive legend indicating that such shares
have not been registered under applicable securities laws.
7) Execution
of Agreement.
Grantee
shall execute this Agreement within 30 days after receipt of same, and promptly
return an executed copy to the Secretary of the Company.
8) Withholding.
Grantee
shall pay the Company an amount equal to the sum of all applicable employment
taxes that the Company or any Subsidiary is required to withhold at any time in
connection with the operation of this Agreement. Such payment may be
made in cash, by withholding from Grantee=s normal
pay, or, if permitted by the Company at the relevant time, by delivery of Shares
(including Restricted Shares then vested under this Agreement).
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9) Miscellaneous.
a) Employment
Rights. The granting of the Award and the execution of this
Agreement shall not afford Grantee any rights to similar grants in future years
or any right to be retained in the employ or service of the Company or any of
its Subsidiaries, nor shall it interfere in any way with the right of the
Company or any such Subsidiary to terminate Grantee's employment or services at
any time, with or without cause, or the right of Grantee to terminate
Grantee=s employment
or services at any time.
b) Shareholder
Rights. While the Restricted Shares remain subject to
forfeiture under Sections 3 and 4 hereof, Grantee shall have all of the rights
of a shareholder of the Company, including the right to vote the Restricted
Shares and to receive any cash dividends.
c) Severability. If
any term, provision, covenant or restriction contained in this Agreement is held
by a court or a governmental agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall continue in full force and
effect, and shall in no way be affected, impaired or invalidated.
d) Controlling
Law. This Agreement is being made in the State of Georgia
(USA) and shall be construed and enforced in accordance with the laws of that
state. Grantee hereby consents to the exclusive jurisdiction of the
Superior Court of Xxxx County, Georgia, and the U.S. District Court in Atlanta,
Georgia, and hereby waives any objection Grantee might otherwise have to
jurisdiction and venue in such courts, in the event either court is requested to
resolve a dispute between the parties with respect to this
Agreement.
e) Construction. This
Agreement contains the entire understanding between the parties and supersedes
any prior understanding and agreements between them with respect to the subject
matter hereof. There are no representations, agreements, arrangements
or understandings, oral or written, between the parties hereto relating to the
subject matter hereof which are not fully expressed herein.
f) Binding
Effect. This Agreement shall inure to the benefit of, and be
binding upon, the Company and its successors and assigns, and Grantee and
Grantee=s heirs and
personal representatives. Any business entity or person succeeding to
all or substantially all of the business of the Company by stock purchase,
merger, consolidation, purchase of assets, or otherwise shall be bound by and
shall adopt and assume this Agreement, and the Company shall obtain the
assumption of this Agreement by such successor.
g) Headings. Section
and other headings contained in this Agreement are included for reference
purposes only and are in no way intended to define or limit the scope, extent or
intent of this Agreement or any provision hereof.
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IN WITNESS WHEREOF, the
individual party hereto has executed this Agreement, and the corporate party has
caused this Agreement to be executed by a duly authorized representative, as of
the date first set forth above.
INTERFACE,
INC.
By:
_______________________
GRANTEE
__________________________________________
________________
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