INTERFACE, INC.
EXECUTIVE BONUS PLAN
1 PURPOSE.
The purpose of the Interface, Inc. Executive Bonus Plan is to provide
bonus compensation for selected officers of Interface, Inc. The Plan is
intended to meet the requirements for "qualified performance-based
compensation" under Section 162(m) of the Internal Revenue Code of 1986,
as amended.
2 DEFINITIONS.
The following capitalized terms, as used herein, shall have the
following meanings:
(a) "Annual Base Salary" shall mean: (i) with respect to any
Participant other than a Section 162(m) Officer, the base salary
paid to such Participant during any Performance Period; and (ii)
with respect to any Section 162(m) Officer, the annual rate of
base salary of such Section 162(m) Officer in effect on the first
day of any Performance Period.
(b) "Award" shall mean an annual incentive compensation award,
granted pursuant to the Plan, which is contingent upon the
attainment of Performance Goals with respect to a Performance
Period.
(c) "Board" shall mean the Board of Directors of Interface.
(d) "Change in Control" shall mean the occurrence of an event
described in Section 5(d) hereof.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean a committee of the Board as described in
Section 3 hereof.
(g) "Company" shall mean, collectively, Interface and its direct and
indirect subsidiaries.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Interface" shall mean Interface, Inc., a Georgia corporation.
(j) "Participant" shall mean an officer of the Company who is,
pursuant to Section 4 of the Plan, selected to participate in the
Plan.
(k) "Performance Goal" shall mean the criteria and objectives,
determined by the Committee, which must be met during the
applicable Performance Period as a condition of the Participant's
receipt of payment with respect to an Award. Performance Goals
may relate to attainment by the Company or a subsidiary or
business unit of specified levels or increases in any or all of
the following: (i) operating income for operations managed; (ii)
cash flow for operations managed; (iii) reduction of off-quality
and waste (under the Company's "war on waste" program initiated
in January 1995); (iv) return on equity; (v) earnings per share;
(vi) return on capital; (vii) return on assets; (viii)
value-based management; (ix) earnings before interest and taxes;
(x) sales growth; (xi) gross margin; (xii) total earnings; (xiii)
earnings growth; or (xiv) increase in the fair market value of
Interface's common stock. In addition, with respect to
Participants who are not Section 162(m) Officers, the Committee
may establish other Performance Goals, including goals relating
to individual performances and non-financial objectives. (l)
"Performance Period" shall mean the Company's fiscal year.
(m) "Plan" shall mean the Interface, Inc. Executive Bonus Plan.
(n) "Section 162(m) Officer" shall mean an officer of the Company
who, in the Committee's determination made at the time of any
Award, is or may become a "covered employee" as defined in
Section 162(m) of the Code and the regulations thereunder.
3 ADMINISTRATION.
(a) General. The Plan shall be administered by the Committee. The
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Committee shall have the authority in its sole discretion,
subject to the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authority either
specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without
limitation: the authority to grant Awards; to determine the
persons to whom, and the time or times at which, Awards shall be
granted; to determine the terms, conditions, restrictions and
performance criteria, including Performance Goals, relating to
any Award; to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, or
surrendered; to construe and interpret the Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to
the Plan; to determine the terms and provisions of Awards; and to
make all other determinations deemed necessary or advisable for
the administration of the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on
all persons, including the Company, the Participant (or any
person claiming any rights under the Plan from or through any
Participant) and any shareholder.
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(b) Members. The Committee shall consist of two or more members of
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the Board, each of whom shall be an "outside director" within the
meaning of Section 162(m) of the Code. All determinations of the
Committee shall be made by a majority of its members either
present in person or participating by conference telephone at a
meeting or by written consent. The Committee may delegate to one
or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee
or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the
Plan.
(c) Liability. No member of the Board or the Committee shall be
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liable for any action taken or determination made in good faith
with respect to the Plan or any Award granted hereunder.
4. ELIGIBILITY.
The Committee shall select which officers of the Company are to
participate in the Plan for a Performance Period. In selecting the
officers of the Company who are eligible to participate in the Plan and
in establishing the terms of Awards granted to such Participants, the
Committee may accept such recommendations of the senior management of
the Company as it deems appropriate. The Committee shall specifically
identify any Participants who it determines are Section 162(m) Officers
with respect to each Performance Period.
5. TERMS OF AWARDS.
(a) In General. The Committee shall grant awards under the Plan for
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each Performance Period at such time or times as it deems
appropriate; provided, Awards to Section 162(m) Officers shall be
made not later than 90 days after the first day of each
Performance Period. Awards shall be expressed as a percentage of
a Participant's Annual Base Salary. The Committee shall specify
the Performance Goals applicable to each Award, as well as the
percentage of the Award assigned to each Performance Goal. The
terms of an Award may contain a range of target levels so that a
Participant who fails to achieve the maximum target level for a
Performance Goal may still earn a portion of the potential bonus
related to such Performance Goal. The terms of an Award to a
Section 162(m) Officer must state an objective formula or
standard for determining the amount of compensation payable to
the Participant. The maximum amount of compensation that may be
paid to any Participant in respect of an Award for any
Performance Year is $1,750,000. Unless otherwise provided by the
Committee in connection
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with the termination of employment of a Participant due to death
or disability or involuntary termination without cause prior to
the last day of a Performance Period, or except as set forth in
Section 5(d) hereof, payment in respect of Awards to a Section
162(m) Officer shall be made only if and to the extent the
Performance Goals with respect to such Performance Period are
attained and the Participant is employed by the Company on the
last day of the Performance Period. Awards granted pursuant to
the Plan shall be evidenced in the minutes of the Committee or in
such other written form as the Committee shall determine
appropriate.
(b) Certification of Performance Criteria. After the end of each
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Performance Period, the Committee shall determine the extent to
which the Performance Criteria have been achieved for that
Performance Period and shall approve the compensation to be paid
to each Participant. The Committee in its sole discretion may
reduce, but not increase, the amount of compensation that
otherwise would be payable under the Plan to a Section 162(m)
Officer if the Committee determines such reduction to be
appropriate based on personal, corporate or other factors that
the Committee deems appropriate. With respect to Participants
other than Section 162(m) Officers, the Committee may take into
account such factors (including, without limitation, individual
job performance, the effect of unanticipated events on the
Company's financial performance or other subjective criteria) as
it deems appropriate in determining whether the Performance
Criteria have been satisfied and in determining the amount of
compensation payable to any such Participant.
(c) Time And Form of Payment. Unless otherwise determined by the
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Committee, all payments in respect of Awards granted under this
Plan shall be made in cash within a reasonable period after the
end of the Performance Period, subject to deferral as provided by
the Committee or under any applicable deferred compensation plan
of the Company.
(d) Change in Control. Notwithstanding any other provision of the
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Plan to the contrary, if, while any Awards remain outstanding
under the Plan, a "Change in Control" of Interface shall occur,
the Performance Period outstanding at the time of such Change in
Control shall be deemed to have been completed, the maximum level
of performance set forth under the respective Performance Goals
shall be deemed to have been attained and a pro rata portion
(based on the number of full and partial months that have elapsed
with respect to such Performance Period) of each outstanding
Award granted to each Participant for the outstanding Performance
Period shall become immediately payable in cash to each
Participant.
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For purposes of this Section 5(d), a Change in Control of
Interface shall occur upon the happening of the earliest to occur
of the following:
(i) During such period as the holders of Interface's
Class B common stock are entitled to elect a
majority of Interface's Board, 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 Exchange Act) of the majority of the
issued and outstanding shares of the Class B common
stock;
(ii) At any time during which the holders of Interface's
Class B common stock have ceased to be entitled to
elect a majority of Interface's Board, 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 Exchange Act, 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) Interface, 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 Interface with one or
more corporations as a result of which the holders of
the outstanding Voting Stock of Interface 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 Interface owns
at least 51 percent of the Voting Stock, or (C) a plan
of complete liquidation of Interface; and
(iv) The election to the Board, without the recommendation or
approval of Ray C. Anderson if he is then serving on the
Board, or, if he is not then serving, of the incumbent
Board, of the lesser of (A) four directors, or (B)
directors constituting a majority of the number of
directors of Interface then in office.
As used herein, "PERMITTED HOLDERS" shall mean the individuals listed
on Schedule 10.11 to the Second Amended and Restated Credit Agreement
dated June 25, 1997, by and among Interface, certain of its
subsidiaries, SunTrust Bank and the other bank 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.
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6. GENERAL PROVISIONS.
(a) Nontransferability. Awards shall not be transferable by a
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Participant except by will or the laws of descent and
distribution.
(b) No Right to Continued Employment. Nothing in the Plan or in
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any Award or other agreement entered into pursuant hereto
shall confer upon any Participant the right to continue in
the employ of the company or to be entitled to any
remuneration or benefits not set forth in the Plan or such
other agreement or to interfere with or limit in any way the
right of the Company to terminate such Participant's
employment.
(c) Withholding Taxes. The Company shall have the right to
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withhold the amount of any taxes that the Company may be
required to withhold before delivery of payment of an Award
to the Participant or other person entitled to such payment,
or to make such other arrangements for the withholding of
taxes that the Company deems satisfactory.
(d) Amendment, Termination and Duration of the Plan. The Board or
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the Committee may at any time and from time to time alter,
amend, suspend, or terminate the Plan in whole or in part;
provided that, no amendment that requires shareholder approval
in order for the Plan to continue to comply with Code Section
162(m) shall be effective unless the same shall be approved by
the requisite vote of the shareholders of the Company.
Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Participant, without such
Participant's consent, under any Award theretofore granted
under the Plan. To the extent then required under Section
162(m) of the Code, the Plan shall again be submitted to the
shareholders of the Company for approval no later than the
first shareholder meeting that occurs in the fifth year
following the year in which the shareholders first approve the
Plan, and the Plan shall terminate if such approval is not
obtained.
(e) Participant Rights. No Participant shall have any claim to be
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granted any Award under the Plan, and there is no obligation
for uniformity of treatment for Participants.
(f) Governing Law. The Plan and all determinations made and
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actions taken pursuant hereto shall be governed by the laws of
the State of Georgia without giving effect to the conflict of
laws principles thereof.
(g) Effective Date. The Plan shall take effect upon its adoption
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by the Board; provided, however, that the Plan shall be
subject to the requisite approval of the shareholders of the
Company to the extent required under Section 162(m) of the
Code. In the absence of such approval, any Award theretofore
granted to a Section 162(m) Officer under the Plan shall be
null and void.
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(h) Beneficiary. A Participant may file with the Committee a
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written designation of a beneficiary on such form as may be
prescribed by the Committee and may, from time to time, amend
or revoke such designation. If no designated beneficiary
survives the Participant, the Participant's estate shall be
deemed to be the grantee's beneficiary.
(i) Interpretation. The Plan is designed and intended to comply,
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to the extent applicable, with the requirements for qualified
performance-based compensation under Section 162(m) of the
Code, and all applicable provisions hereof shall be construed
in a manner to so comply.
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