Exhibit 10.2
SECOND AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This Second Amendment to Change in Control Agreement
("Amendment") is made and entered into as of the 14th day of January,
1999, 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, as previously
amended (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 4(c) of the Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(c) Benefits to be Provided. If Executive becomes
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eligible for benefits under subsection (b) above, the
Company shall pay or provide to Executive the compensation
and benefits set forth in this subsection (c); provided,
however, that the compensation and benefits to be paid or
provided pursuant to paragraphs (i) through (iv) of this
subsection (c) shall be reduced to the extent that Executive
receives or is entitled to receive upon Executive's
termination the compensation and benefits (but only to the
extent Executive actually receives such compensation and
benefits) described in paragraphs (i) through (iv) of this
subsection (c) pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the
Company of the employment agreement; and, provided, further,
after taking into consideration any such reductions,
Executive shall continue to be entitled to receive in the
aggregate under this Agreement and the employment agreement
an amount of compensation and benefits equal to the full
amount of compensation and benefits provided under this
Agreement, and any amounts paid under paragraphs (i), (ii)
and (iv) of this Agreement shall be paid in the manner
provided in such paragraphs.
3. Section 5 of the Agreement is hereby deleted in its entirety
and the following is substituted in its place:
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5. Payments to Cover Excise Taxes.
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(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined (as
hereafter provided) that any payment or distribution to or
for Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
pursuant to or by reason of any other agreement, policy,
plan, program or arrangement (including, without limitation,
any employment agreement, Stock Plan or salary continuation
agreement), or similar right (a "Payment"), would be subject
to the excise tax imposed by Section 4999 of the Code (or
any successor provisions thereto), or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment
or payments (a "Gross-Up Payment") from the Company. The
total amount of the Gross-Up Payment shall be an amount such
that, after payment by (or on behalf of) Executive of any
Excise Tax and all federal, state and other taxes (including
any interest or penalties imposed with respect to such
taxes) imposed upon the Gross-Up Payment, the remaining
amount of the Gross-Up Payment is equal to the Excise Tax
imposed upon the Payment(s). For purposes of clarity, the
amount of the Gross-Up Payment shall be that amount
necessary to pay the Excise Tax in full and all taxes
assessed upon the Gross-Up Payment.
(b) An initial determination as to whether a Gross-Up
Payment is required pursuant to this Section 5 and the
amount of such Gross-Up Payment shall be made by an
accounting firm selected by the Company, and reasonably
acceptable to Executive, which is then designated as one of
the five largest accounting firms in the United States (the
"Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed
supporting calculations and documentation to the Company and
Executive as promptly as practicable after such calculation
is requested by the Company or by Executive with respect to
a Payment (or Payments), and if the Accounting Firm
determines that no Excise Tax is payable by Executive with
respect to a Payment (or Payments), it shall furnish
Executive with an opinion reasonably acceptable to Executive
that no Excise Tax will be imposed with respect to any such
Payment(s). Within 15 days of the delivery of the
Determination to Executive, Executive shall have the right
to dispute the Determination (the "Dispute"). The Gross-Up
Payment, if any, as determined pursuant to this Section 5
shall be paid by the Company to Executive within 15 days of
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the receipt of the Accounting Firm's Determination. The
existence of the Dispute shall not in any way affect the
right of Executive to receive the Gross-Up Payment in
accordance with the Determination. If there is no Dispute,
the Determination shall be binding, final and conclusive
upon the Company and Executive subject to the application of
Section 5(c).
(c) As a result of the uncertainty in the application
of Sections 4999 and 280G of the Code, it is possible that a
Gross-Up Payment (or a portion thereof) will be paid which
should not have been paid (an "Excess Payment") or a Gross-
Up Payment (or a portion thereof) which should have been
paid will not have been paid (an "Underpayment"). An
Underpayment shall be deemed to have occurred upon the
earliest to occur of the following events: (i) upon notice
(formal or informal) to Executive from any governmental
taxing authority that the tax liability of Executive
(whether in respect of the then current taxable year of
Executive or in respect of any prior taxable year of
Executive) may be increased by reason of the imposition of
the Excise Tax on a Payment (or Payments) with respect to
which the Company has failed to make a sufficient Gross-Up
Payment, (ii) upon a determination by a court, (iii) by
reason of a determination by the Company (which shall
include the position taken by the Company, or its
consolidated group, on its federal income tax return), or
(iv) upon the resolution to the satisfaction of Executive of
the Dispute. If any Underpayment occurs, Executive shall
promptly notify the Company and the Company shall pay to
Executive within 15 days of the date the Underpayment is
deemed to have occurred under (i), (ii), (iii) or (iv)
above, but in no event less than 5 days prior to the date on
which the applicable government taxing authority has
requested payment, an additional Gross-Up Payment equal to
the amount of the Underpayment plus any interest and
penalties imposed on the Underpayment.
An Excess Payment shall be deemed to have occurred upon
a "Final Determination" (as hereinafter defined) that the
Excise Tax shall not be imposed upon any Payment(s) (or
portion of a Payment) with respect to which Executive had
previously received a Gross-Up Payment. A Final
Determination shall be deemed to have occurred when
Executive has received from the applicable governmental
taxing authority a refund of taxes or other reduction in his
tax liability by reason of the Excess Payment and upon
either (i) the date a determination is made by, or an
agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds
Executive and such taxing authority, or in the event that a
claim is brought before a court of competent jurisdiction,
the date upon which a final determination has been made by
such court and either all appeals have been taken and
finally resolved or the time for all appeals has expired, or
(ii) the statute of limitations with respect to Executive's
applicable tax return has expired. If an Excess Payment is
determined to have been made, the amount of the Excess
Payment shall be treated as a loan by the Company to
Executive and Executive shall pay to the Company within
15 days following demand (but not less than 30 days after
the determination of such Excess Payment) the amount of the
Excess Payment plus interest at an annual rate equal to the
rate provided for in Section 1274(b)(2)(B) of the Code from
the date the Gross-Up Payment (to which the Excess Payment
relates) was paid to Executive until the date of repayment
to the Company.
(d) Notwithstanding anything contained in this
Agreement to the contrary, in the event that, according to
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the Determination, an Excise Tax will be imposed on any
Payment(s), the Company shall pay to the applicable
government taxing authorities as Excise Tax withholding, the
amount of any Excise Tax that the Company has actually
withheld from the Payment(s); provided, that the Company's
payment of withheld Excise Tax shall not alter the Company's
obligation to pay the Gross-Up Payment required under this
Section 5.
(e) Executive and the Company shall each provide the
Accounting Firm access to and copies of any books, records
and documents in the possession of the Company or Executive,
as the case may be, reasonably requested by the Accounting
Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the
Determination contemplated by Section 5(b) hereof.
(f) The fees and expenses of the Accounting Firm for
its services in connection with the Determination and
calculations contemplated by Section 5(b) shall be paid by
the Company.
4. 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
Charles R. Eitel
President
EXECUTIVE:
/s/ Ray C. Anderson
Ray C. Anderson
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