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Exhibit 10.4
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AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 1st day of August, 1996,
by and between INTERFACE, INC., a Georgia corporation (the "Company"), and
RAYMOND S. WILLOCH (the "Executive").
W I T N E S S E T H:
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.
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
Ray C. Anderson remains satisfied with the membership of a majority
of the Board; or
(iii) the death of Ray C. Anderson; 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 Ray C.
Anderson 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)(1) of the Code.
7. Present Value -- The term "Present Value" shall have the same meaning
as provided in Section 280G(d)(4) of the Code.
8. Reasonable Compensation -- The term "Reasonable Compensation" shall
have the same meaning as provided in Section 280G(b)(4) of the Code.
9. 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.
10. 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.
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 reduction
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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 thirty (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 (1/12) of the average ("Average Bonus") of the bonuses paid to
him for the two (2) 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;
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provided, 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
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(30) days of the Executive's termination of 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., 2859 Paces Ferry Road, Suite 2000,
Atlanta, Georgia 30339, 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,
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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 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.
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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.
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/ Ray C. Anderson
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Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ Raymond S. Willoch
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Secretary
EXECUTIVE
/s/ Raymond S. Willoch
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Raymond S. Willoch
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