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EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 8th day of Sept, 1995,
by and between INTERFACE, INC., a Georgia corporation (the "Company"), and
XXXXX X. XXXXXXX (the "Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key employees of
continuity of management and objective judgment in the event of any Change in
Control of the Company, and to induce its key employees to remain employed by
the Company, and the Executive is a key employee of the Company and an
integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to
receive in the absence of a Change in Control of the Company, and this
Agreement accordingly will be operative only upon circumstances relating to a
Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by the
parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change
in Control of the Company, as defined in Article III below. Immediately upon
such an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
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III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's material breach of this Agreement,
or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
mean:
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Xxx X. Xxxxxxxx remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Xxx X. Xxxxxxxx; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Xxx X. Xxxxxxxx remains satisfied with
the membership of a majority of the Board.
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5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six
(6) months.
6. Excess Severance Payment -- The term "Excess Severance Payment"
shall have the same meaning as the term "excess parachute payment" defined in
Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class
B Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term of
this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination, as
defined below, then the benefits described in Section 2 below shall be paid or
provided to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the
Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary
on the part of the Executive, and, in the judgment of the Executive,
is due to (i) a reduction of the Executive's responsibilities, title
or status resulting from a formal change in such title or status, or
from the assignment to the Executive of any duties inconsistent with
his title, duties or responsibilities in effect within the year prior
to the Change in Control; (ii) a
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reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to
the extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b),
(c), (d) and (e) of this Section 2 pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the Company of the
employment agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are actually
paid or provided under this Agreement, the benefits shall be provided in lump
sum payments where specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be
paid in a single lump sum payment, to be paid not later than 30 days
after his termination of employment; provided, further, that the
amount of such lump sum payment shall be determined by taking the
salary payments to be made and discounting them to their Present Value
(as defined in Section III.8) on the date Executive's employment is
terminated. For purposes hereof, the Executive's "current salary"
shall be the highest rate in effect during the six-month period prior
to the Executive's termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be
made and discounting them to their Present Value (as defined
in Section III.8) on the date Executive's employment is
terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Section shall be applied against and reduce the period for which
COBRA will be provided. If the Executive is covered by a split-dollar
or similar life insurance program at the date of termination, he
shall have the option in his sole discretion to have such policy
transferred to him upon termination, provided that the Company is paid
for its interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface,
Inc. (or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is
not permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan)
of the excess of (i) the benefit the Executive would have been paid
under such plan if he had continued to be covered for the 24-month
period (less any amounts he would have been required to contribute)
and been treated as fully vested, over (ii) the benefit actually
payable under such plan. The Company shall pay such additional
benefits (if any) in a lump sum.
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(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a) or
(b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount,
the parties shall take into account all provisions of Code Section 280G, and
the regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's
independent accountants within thirty (30) days of the Executive's termination
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employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be
modified or reduced; provided, however, that no increase in the amount of any
payment shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be interpreted
so as to avoid the imposition of excise taxes on the Executive under Section
4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G(a) of the Code with respect to amounts payable under this
Agreement. In connection with any Internal Revenue Service examination, audit
or other inquiry, the Company and Executive agree to take action to provide,
and to cooperate in providing, evidence to the Internal Revenue Service (and,
if applicable, the state revenue department) that the compensation and
benefits provided under this Agreement do not result in the payment of Excess
Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return
receipt requested), to such party at such party's address as specified below,
or at such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 0000 Xxxxx Xxxxx Xxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets or
otherwise, shall be bound by and shall adopt and assume this Agreement and the
Company shall obtain the assumption of this Agreement by such
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successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees
and expenses incurred in enforcing this Agreement and the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each
party shall pay its own legal fees and other expenses associated with any
dispute, provided that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to
this Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
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9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Xxx X. Xxxxxxxx
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Xxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ Xxxxx X. Xxxxxx
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Secretary
EXECUTIVE
/s/ Xxxxx X. XxXxxxx
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Xxxxx X. XxXxxxx
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