INTERFACE, INC.
NONQUALIFIED SAVINGS PLAN II
INTERFACE, INC.
NONQUALIFIED SAVINGS PLAN II
Effective as of the 1st day of January, 2005, Interface, Inc. (the
"Controlling Company") hereby adopts the Interface, Inc. Nonqualified Savings
Plan II (the "Plan").
PURPOSE
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A. GOAL. The Controlling Company desires to provide its designated key
management and highly compensated employees (and those of its affiliated
companies that participate in the Plan) with an opportunity (i) to defer the
receipt and income taxation of a portion of such employees' annual compensation,
and (ii) to receive, on a deferred basis, matching contributions made with
respect to at least a portion of such employees' own deferrals.
B. COORDINATION WITH 401(K) PLAN. The Plan generally is intended to
allow eligible employees to maximize the retirement benefits they otherwise
would be able to attain under the Controlling Company's 401(k) plan (or the
401(k) plan of a participating affiliate company), but for the limits on
contributions and benefits applicable to such plan under the Internal Revenue
Code of 1986, as amended (the "Code"); including, without limitation, the
maximum limits on compensation, employee deferrals and allocations (under Code
Sections 401(a)(17), 402(g) and 415, respectively); and the discrimination
testing limits (under Code Sections 401(k) and 401(m)).
C. TYPE OF PLAN. The Plan constitutes an unfunded, nonqualified
deferred compensation plan that benefits certain designated employees who are
within a select group of key management or highly compensated employees. It is
intended that this Plan comply with Section 409A of the Internal Revenue Code
1986, as amended.
STATEMENT OF AGREEMENT
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To adopt the Plan with the purposes and goals as hereinabove described,
the Controlling Company hereby sets forth the terms and provisions as follows:
INTERFACE, INC.
NONQUALIFIED SAVINGS PLAN II
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................................1
1.1 ACCOUNT...............................................................................................1
1.2 ADMINISTRATIVE COMMITTEE..............................................................................1
1.3 BASE PAY..............................................................................................1
1.4 BENEFICIARY...........................................................................................1
1.5 BOARD.................................................................................................1
1.6 BONUSES...............................................................................................1
1.7 CAUSE.................................................................................................1
1.8 CHANGE IN CONTROL.....................................................................................1
1.9 CODE..................................................................................................2
1.10 COMMISSIONS...........................................................................................2
1.11 COMPENSATION..........................................................................................2
1.12 CONTROLLED GROUP......................................................................................2
1.13 CONTROLLING COMPANY...................................................................................2
1.14 DEFERRAL CONTRIBUTIONS................................................................................3
1.15 DEFERRAL ELECTION.....................................................................................3
1.16 DISABILITY OR DISABLED................................................................................3
1.17 DISCRETIONARY CONTRIBUTIONS...........................................................................3
1.18 EFFECTIVE DATE........................................................................................3
1.19 ELIGIBLE EMPLOYEE.....................................................................................3
1.20 ERISA.................................................................................................3
1.21 FINANCIAL HARDSHIP....................................................................................3
1.22 INVESTMENT ELECTION...................................................................................4
1.23 INVESTMENT FUNDS......................................................................................4
1.24 INVOLUNTARY TERMINATION...............................................................................4
1.25 KEY EMPLOYEE..........................................................................................4
1.26 MATCHING CONTRIBUTIONS................................................................................4
1.27 PARTICIPANT...........................................................................................4
1.28 PARTICIPATING COMPANY.................................................................................4
1.29 PERMITTED HOLDERS.....................................................................................4
1.30 PLAN..................................................................................................4
1.31 PLAN YEAR.............................................................................................4
1.32 SAVINGS AND INVESTMENT PLAN...........................................................................5
1.33 SURVIVING SPOUSE......................................................................................5
1.34 TRUST OR TRUST AGREEMENT..............................................................................5
1.35 TRUSTEE...............................................................................................5
1.36 TRUST FUND............................................................................................5
1.37 VALUATION DATE........................................................................................5
1.38 VOLUNTARY TERMINATION.................................................................................5
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1.39 VOTING STOCK..........................................................................................5
1.40 YEAR OF SERVICE.......................................................................................5
ARTICLE II ELIGIBILITY AND PARTICIPATION..........................................................................7
2.1 ELIGIBILITY...........................................................................................7
(a) ANNUAL PARTICIPATION...............................................................................7
(b) INTERIM PLAN YEAR PARTICIPATION....................................................................7
2.2 PROCEDURE FOR ADMISSION...............................................................................7
2.3 CESSATION OF ELIGIBILITY..............................................................................7
(b) CESSATION OF ELIGIBLE STATUS.......................................................................7
(c) INACTIVE PARTICIPANT STATUS........................................................................7
ARTICLE III PARTICIPANTS' ACCOUNTS; DEFERRALS AND CREDITING.......................................................9
3.1 PARTICIPANTS' ACCOUNTS................................................................................9
(a) ESTABLISHMENT OF ACCOUNTS..........................................................................9
(b) NATURE OF CONTRIBUTIONS AND ACCOUNTS...............................................................9
(c) SEVERAL LIABILITIES................................................................................9
(d) GENERAL CREDITORS..................................................................................9
3.2 DEFERRAL CONTRIBUTIONS................................................................................9
(a) EFFECTIVE DATE....................................................................................10
(b) TERM..............................................................................................10
(c) AMOUNT............................................................................................10
(d) CREDITING OF DEFERRED BASE PAY AND COMMISSIONS AND/OR BONUSES.....................................10
3.3 MATCHING CONTRIBUTIONS...............................................................................11
(a) AMOUNT............................................................................................11
(b) TIME OF CREDITING.................................................................................11
3.4 DISCRETIONARY CONTRIBUTIONS..........................................................................11
3.5 IMPACT OF CODE SECTION 409A ON PRIOR DEFERRALS.......................................................11
3.6 DEBITING OF DISTRIBUTIONS............................................................................11
3.7 CREDITING OF EARNINGS................................................................................11
(a) RATE OF RETURN....................................................................................12
(b) AMOUNT INVESTED...................................................................................12
(c) DETERMINATION OF AMOUNT...........................................................................12
3.8 VESTING..............................................................................................12
(a) GENERAL...........................................................................................12
(b) CHANGE IN CONTROL.................................................................................12
3.9 GOOD FAITH VALUATION BINDING.........................................................................13
3.10 ERRORS AND OMISSIONS IN ACCOUNTS.....................................................................13
ARTICLE IV INVESTMENT FUNDS......................................................................................14
4.1 SELECTION BY ADMINISTRATIVE COMMITTEE................................................................14
4.2 PARTICIPANT DIRECTION OF DEEMED INVESTMENTS..........................................................14
(a) NATURE OF PARTICIPANT DIRECTION...................................................................14
(b) INVESTMENT OF CONTRIBUTIONS.......................................................................14
(c) INVESTMENT OF EXISTING ACCOUNT BALANCES...........................................................14
(d) ADMINISTRATIVE COMMITTEE DISCRETION...............................................................15
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ARTICLE V PAYMENT OF ACCOUNT BALANCES............................................................................16
5.1 BENEFIT PAYMENTS UPON SEPARATION FROM SERVICE FOR REASONS OTHER THAN DEATH...........................16
(a) GENERAL RULE CONCERNING BENEFIT PAYMENTS..........................................................16
(b) TIMING OF DISTRIBUTION............................................................................16
5.2 FORM OF DISTRIBUTION.................................................................................17
(a) SINGLE-SUM PAYMENT................................................................................17
(b) ANNUAL INSTALLMENTS...............................................................................17
5.3 DEATH BENEFITS.......................................................................................19
5.4 HARDSHIP DISTRIBUTIONS...............................................................................19
5.5 BENEFICIARY DESIGNATION..............................................................................19
(b) GENERAL...........................................................................................19
(b) NO DESIGNATION OR DESIGNEE DEAD OR MISSING........................................................20
5.6 TAXES................................................................................................20
ARTICLE VI CLAIMS................................................................................................21
6.1 CLAIMS...............................................................................................21
(a) PROCEDURE.........................................................................................21
(b) REVIEW PROCEDURE..................................................................................21
(c) SATISFACTION OF CLAIMS............................................................................22
ARTICLE VII SOURCE OF FUNDS; TRUST...............................................................................23
7.1 SOURCE OF FUNDS......................................................................................23
7.2 TRUST................................................................................................23
(a) ESTABLISHMENT.....................................................................................23
(b) DISTRIBUTIONS.....................................................................................23
(c) STATUS OF THE TRUST...............................................................................23
(d) CHANGE IN CONTROL.................................................................................23
ARTICLE VIII ADMINISTRATIVE COMMITTEE............................................................................25
8.1 ACTION...............................................................................................25
8.2 RIGHTS AND DUTIES....................................................................................25
8.3 COMPENSATION, INDEMNITY AND LIABILITY................................................................26
ARTICLE IX AMENDMENT AND TERMINATION.............................................................................27
9.1 AMENDMENTS...........................................................................................27
9.2 TERMINATION OF PLAN..................................................................................27
ARTICLE X MISCELLANEOUS..........................................................................................28
10.1 TAXATION.............................................................................................28
10.2 NO EMPLOYMENT CONTRACT...............................................................................28
10.3 HEADINGS.............................................................................................28
10.4 GENDER AND NUMBER....................................................................................28
10.5 ASSIGNMENT OF BENEFITS...............................................................................28
10.6 LEGALLY INCOMPETENT..................................................................................29
10.7 GOVERNING LAW........................................................................................29
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ARTICLE I
DEFINITIONS
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For purposes of the Plan, the following terms, when used with an
initial capital letter, shall have the meaning set forth below unless a
different meaning plainly is required by the context.
1.1 ACCOUNT shall mean, with respect to a Participant or Beneficiary,
the total dollar amount or value evidenced by the last balance posted in
accordance with the terms of the Plan to the account record established for such
Participant or Beneficiary.
1.2 ADMINISTRATIVE COMMITTEE shall mean the administrative committee of
the Savings and Investment Plan, or such other committee as shall be appointed
by the Board, which shall act on behalf of the Controlling Company to administer
the Plan, all as provided in Article VIII.
1.3 BASE PAY shall mean Compensation minus Bonuses and Commissions.
1.4 BENEFICIARY shall mean, with respect to a Participant, the
person(s) designated in accordance with Section 5.5 to receive any death
benefits that may be payable under the Plan upon the death of the Participant.
1.5 BOARD shall mean the Board of Directors of the Controlling Company.
1.6 BONUSES shall mean such portion of a Participant's Compensation
designated as Bonuses by the Administrative Committee.
1.7 CAUSE shall mean (i) an act that constitutes, on the part of a
Participant, (A) fraud, dishonesty, gross negligence, or willful misconduct and
(B) that directly results in material injury to the Controlling Company or any
member of the Controlled Group, or (ii) the Participant's conviction of a felony
or other crime involving moral turpitude. A termination of the Participant shall
not be considered a termination for Cause based on clause (i) of the preceding
sentence unless, at least 30 days before such termination is effective, the
Participating Company gives written notice of such termination to the
Participant specifying the conduct deemed to qualify as Cause, and the
Participating Company gives the Participant at least 30 days to remedy the
events or circumstances constituting Cause to the reasonable satisfaction of the
Controlling Company. A termination for Cause based on clause (ii) above shall
take effect immediately upon the Controlling Company's delivery of the
termination notice.
1.8 CHANGE IN CONTROL shall mean and be deemed to occur on the earliest
of, and upon any subsequent occurrence of, the following:
(a) During such period as the holders of the Controlling
Company's Class B common stock are entitled to elect a majority of the
Controlling Company's Board of Directors, the Permitted Holders 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 Controlling Company's Class B common stock;
(b) At any time during which the holders of the Controlling
Company's Class B common stock have ceased to be entitled to elect a majority of
the Controlling 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 Voting Stock;
(c) The effective time of (i) a merger, consolidation or
other business combination of the Controlling Company with one or more
corporations as a result of which the holders of the outstanding Voting Stock of
the Controlling Company immediately prior to such merger or consolidation hold
less than 51 percent of the Voting Stock of the surviving or resulting
corporation, or (ii) a transfer of all or substantially all of the property or
assets of the Controlling Company other than to an entity of which the
Controlling Company owns at least 51 percent of the Voting Stock, or (iii) a
plan of complete liquidation of the Controlling Company; and
(d) The election to the Board of Directors of the Controlling
Company, without the recommendation or approval of Ray C. Anderson 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 Controlling Company, of the lesser of (i)
four directors, or (ii) directors constituting a majority of the number of
directors of the Controlling Company then in office.
1.9 CODE shall mean the Internal Revenue Code of 1986, as amended, and
any succeeding federal tax provisions.
1.10 COMMISSIONS shall mean such portion of a Participant's
Compensation designated as commissions by the Administrative Committee.
1.11 COMPENSATION shall mean, for a Participant for any Plan Year, the
total of such Participant's compensation that would be used under the Savings
and Investment Plan, for purposes of determining the amount of his before-tax
and matching contributions thereunder, if he were an active participant in the
Savings and Investment Plan during the portion of such Plan Year that he is an
active Participant herein, plus his Deferral Contributions for such Plan Year;
provided, for purposes of calculating a Participant's Compensation hereunder,
the maximum compensation limit under Code Section 401(a)(17) shall be
disregarded.
1.12 CONTROLLED GROUP shall mean all of the companies that are either
(i) members of the same controlled group of corporations (within the meaning of
Code Section 414(b)), or (ii) under common control (within the meaning of Code
Section 414(c)), with the Controlling Company.
1.13 CONTROLLING COMPANY shall mean Interface, Inc., a corporation with
its principal place of business in Atlanta, Georgia.
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1.14 DEFERRAL CONTRIBUTIONS shall mean, for each Plan Year, that
portion of a Participant's Compensation deferred under the Plan pursuant to
Section 3.2.
1.15 DEFERRAL ELECTION shall mean a written election form (or election
in any other format permitted by the Administrative Committee) on which a
Participant may elect to defer under the Plan a portion of his Base Pay and
Commissions and/or Bonuses.
1.16 DISABILITY OR DISABLED shall mean a Participant's inability, as a
result of physical or mental incapacity, to substantially perform his duties for
the Controlling Company or any member of the Controlled Group on a full-time
basis for a period of 6 months.
1.17 DISCRETIONARY CONTRIBUTIONS shall mean, for each Plan Year, the
amount credited to a Participant's Account pursuant to Section 3.4.
1.18 EFFECTIVE DATE shall mean January 1, 2005.
1.19 ELIGIBLE EMPLOYEE shall mean, for a Plan Year or portion of a Plan
Year, an individual:
(a) Who is a member of a select group of highly
compensated or key management employees who the Administrative Committee, in its
sole discretion, determines is eligible to participate in the Plan; and
(b) Who has satisfied the minimum compensation and/or
other classification requirements, if any, established from time to time by the
Administrative Committee.
1.20 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.21 FINANCIAL HARDSHIP shall mean a severe financial hardship to the
Participant resulting from (i) an illness or accident of the Participant, the
Participant's spouse or the Participant's dependent [as defined in Code Section
152(a)]; (ii) loss of the Participant's property due to casualty; (iii) or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Financial Hardship shall be
determined by the Administrative Committee on the basis of the facts of each
case, including information supplied by the Participant in accordance with
uniform guidelines prescribed from time to time by the Administrative Committee;
provided, the Participant will be deemed not to have a Financial Hardship to the
extent that such hardship is or may be relieved:
(a) Through reimbursement or compensation by insurance or
otherwise; or
(b) By liquidation of the Participant's assets, to the
extent the liquidation of assets would not itself cause severe financial
hardship.
Examples of what are not considered to be Financial Hardships include the need
to send a Participant's child to college or the desire to purchase a home.
Notwithstanding anything in the
3
foregoing to the contrary, Financial Hardships shall be limited to circumstances
constituting "unforeseeable emergencies" under Code Section 409A.
1.22 INVESTMENT ELECTION shall mean an election, made in such form as
the Administrative Committee may direct, pursuant to which a Participant may
elect the Investment Funds in which the amounts credited to his Account shall be
deemed to be invested.
1.23 INVESTMENT FUNDS shall mean the investment funds selected from
time to time by the Administrative Committee for purposes of determining the
rate of return on amounts deemed invested pursuant to the terms of the Plan.
1.24 INVOLUNTARY TERMINATION shall mean termination of employment with
the Controlling Company and all other members of the Controlled Group that is
involuntary on the part of a Participant and that occurs for reasons other than
for (i) Cause, (ii) Disability, or (iii) the Participant's death.
1.25 KEY EMPLOYEE shall have that meaning set forth in Code Section
409A (which incorporates Code Section 416(i)).
1.26 MATCHING CONTRIBUTIONS shall mean, for each Plan Year, the amount
credited to a Participant's Account pursuant to Section 3.3.
1.27 PARTICIPANT shall mean any person who has been admitted to, and
has not been removed from, participation in the Plan pursuant to the provisions
of Article II.
1.28 PARTICIPATING COMPANY shall mean the Controlling Company and the
participating companies as listed on Schedule A in the Savings and Investment
Plan.
1.29 PERMITTED HOLDERS shall mean the individuals listed on Schedule
10.11 to the Second Amended and Restated Credit Agreement dated as of June 25,
1997, by and among the Controlling Company, certain of its subsidiaries,
SunTrust Bank and the other banks 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.
1.30 PLAN shall mean the Interface, Inc. Nonqualified Savings Plan II,
as contained herein and all amendments hereto. For tax purposes and purposes of
Title I of ERISA, the Plan is intended to be an unfunded, nonqualified deferred
compensation plan covering certain designated employees who are within a select
group of key management or highly compensated employees.
1.31 PLAN YEAR shall mean the 12-consecutive-month period ending on
December 31 of each year.
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1.32 SAVINGS AND INVESTMENT PLAN shall mean the Interface, Inc. Savings
and Investment Plan, and any successor plan thereto.
1.33 SURVIVING SPOUSE shall mean, with respect to a Participant, the
person who is treated as married to such Participant under the laws of the state
in which the Participant resides. The determination of a Participant's Surviving
Spouse shall be made as of the date of such Participant's death.
1.34 TRUST OR TRUST AGREEMENT shall mean the separate agreement or
agreements between the Controlling Company and the Trustee governing the
creation of the Trust Fund, and all amendments thereto.
1.35 TRUSTEE shall mean the party or parties so designated from time to
time pursuant to the terms of the Trust Agreement.
1.36 TRUST FUND shall mean the total amount of cash and other property
held by the Trustee (or any nominee thereof) at any time under the Trust
Agreement.
1.37 VALUATION DATE shall mean each day the New York Stock Exchange is
open for trading; provided, the value of an Account or the Trust Fund on any
other date will be the value determined as of the immediately preceding data on
which the New York Stock Exchange was open for trading.
1.38 VOLUNTARY TERMINATION shall mean termination of employment with
the Controlling Company and all other members of the Controlled Group that is
voluntary on the part of the Participant, and, in the judgment of the
Participant, is due to (i) a reduction of the Participant's responsibilities,
title or status resulting from a formal change in such title or status, or from
the assignment to the Participant of any duties inconsistent with his title,
duties or responsibilities in effect within the year prior to a Change in
Control; (ii) a reduction in the Participant's compensation or benefits, or
(iii) an employer-required involuntary relocation of the Participant's place of
residence or a significant increase in the Participant's travel requirements. A
termination shall not be considered voluntary if such termination is the result
of Cause, Disability or the Participant's death.
1.39 VOTING STOCK shall mean the Controlling Company's outstanding
capital stock entitled to vote for the election of directors.
1.40 YEAR OF SERVICE shall mean, with respect to a Participant, the
number of whole 12-month periods of service the Participant has with the
Controlling Company and the members of the Controlled Group. In determining a
Participant's number of whole 12-month periods of service for purposes of the
Plan, nonsuccessive periods of service shall be aggregated on the basis of days
of service, with 365 days (366 days in a leap year) of service equal to one Year
of Service. Periods of service of less than 365 days (366 days in a leap year)
shall be disregarded. To the extent determined by the Administrative Committee,
set forth on a schedule hereto, and not otherwise counted hereunder, a
Participant's periods of employment with one or more companies or enterprises
acquired by or merged into, or all or a portion of the assets or business
5
of which are acquired by, the Controlling Company or any member of the
Controlled Group, shall be taken into account in determining his Years of
Service.
6
ARTICLE II
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.1 ELIGIBILITY.
(a) ANNUAL PARTICIPATION. Each individual who is both an
Eligible Employee and eligible to participate in the Savings and Investment Plan
as of the first day of a Plan Year shall be eligible to participate in the Plan
for the entire Plan Year. Such individual's participation shall become effective
as of the first day of such Plan Year (assuming he satisfies the procedures for
admission described below).
(b) INTERIM PLAN YEAR PARTICIPATION.
(i) Each individual who is an Eligible Employee and who
becomes eligible to participate in the Savings and Investment Plan during a Plan
Year shall be eligible to participate in the Plan for a portion of such Plan
Year. Such individual's participation shall become effective as of the first day
of the calendar month coinciding with or next following the date he becomes
eligible to participate in the Savings and Investment Plan (assuming he
satisfies the procedures for admission described below).
(ii) Each individual who is an Eligible Employee, but
who is not yet eligible to participate in the Savings and Investment Plan, in
the sole discretion of the Administrative Committee (which may make such a
determination on an individual-by-individual basis), may be eligible to
participate in the Plan for a portion of any Plan Year before he otherwise
becomes eligible to participate pursuant to this Section 2.1. Such individual's
participation shall become effective as of the date specified by the
Administrative Committee (assuming he satisfies the procedures for admission
described below).
2.2 PROCEDURE FOR ADMISSION.
Each Eligible Employee shall become a Participant by completing
such forms and providing such data in a timely manner, as are required by the
Administrative Committee as a precondition of participation in the Plan. Such
forms and data may include, without limitation, a Deferral Election, the
Eligible Employee's acceptance of the terms and conditions of the Plan, and the
designation of a Beneficiary to receive any death benefits payable hereunder.
2.3 CESSATION OF ELIGIBILITY.
(a) CESSATION OF ELIGIBLE STATUS. The Administrative
Committee may remove an employee from active participation in the Plan if, as of
any day during a Plan Year, he ceases to satisfy the criteria which qualified
him as an Eligible Employee, in which case his deferrals under the Plan shall
cease.
(b) INACTIVE PARTICIPANT STATUS. Even if his active
participation in the Plan ends, an employee shall remain an inactive Participant
in the Plan until the earlier of (i) the date
7
the full amount of his vested Account (if any) is distributed from the Plan, or
(ii) the date he again becomes an Eligible Employee and recommences
participation in the Plan. During the period of time that an employee is an
inactive Participant in the Plan, his vested Account shall continue to be
credited with earnings as provided for in Section 3.7.
8
ARTICLE III
PARTICIPANTS' ACCOUNTS; DEFERRALS AND CREDITING
-----------------------------------------------
3.1 PARTICIPANTS' ACCOUNTS.
(a) ESTABLISHMENT OF ACCOUNTS. The Administrative
Committee shall establish and maintain, on behalf of each Participant, an
Account. Each Account shall be credited with (i) Deferral Contributions, (ii)
Matching Contributions, (iii) Discretionary Contributions, and (iv) earnings
attributable to such Account, and shall be debited by distributions. Each
Account of a Participant shall be maintained until the vested value thereof has
been distributed to or on behalf of such Participant or his Beneficiary.
(b) NATURE OF CONTRIBUTIONS AND ACCOUNTS. The amounts
credited to a Participant's Account shall be represented solely by bookkeeping
entries. Except as provided in Article VII, no monies or other assets shall
actually be set aside for such Participant, and all payments to a Participant
under the Plan shall be made from the general assets of the Participating
Companies.
(c) SEVERAL LIABILITIES. Each Participating Company shall
be severally (and not jointly) liable for the payment of benefits under the Plan
in an amount equal to the total of (i) all undistributed Deferral Contributions
withheld from Participants' Compensation paid or payable by each such
Participating Company, (ii) all undistributed Matching Contributions
attributable to Deferral Contributions described in clause (i) hereof, (iii) all
undistributed Discretionary Contributions attributable to such contributions
made for periods while the benefiting Participants were employed by such
Participating Company, and (iv) all undistributed earnings attributable thereto.
The Administrative Committee shall allocate the total liability to pay benefits
under the Plan among the Participating Companies pursuant to this formula, and
the Administrative Committee's determination shall be final and binding.
(d) GENERAL CREDITORS. Any assets which may be acquired
by a Participating Company in anticipation of its obligations under the Plan
shall be part of the general assets of such Participating Company. A
Participating Company's obligation to pay benefits under the Plan constitutes a
mere promise of such Participating Company to pay such benefits, and a
Participant or Beneficiary shall be and remain no more than an unsecured,
general creditor of such Participating Company.
3.2 DEFERRAL CONTRIBUTIONS.
Each Eligible Employee who is or becomes eligible to participate
in the Plan for all or any portion of a Plan Year may elect to have Deferral
Contributions made on his behalf for such Plan Year by completing and delivering
to the Administrative Committee (or its designee) Deferral Elections setting
forth the terms of his election. Subject to the terms and conditions set forth
below, Deferral Elections may provide for the reduction of an Eligible
Employee's (i) Base
9
Pay and Commissions payable each payroll period and/or (ii) Bonuses payable
during the Plan Year for which the Deferral Elections are in effect. Subject to
any modifications, additions or exceptions that the Administrative Committee, in
its sole discretion, deems necessary, appropriate or helpful, the following
terms shall apply to such elections:
(a) EFFECTIVE DATE.
(i) INITIAL DEFERRAL ELECTIONS. A Participant's initial
Deferral Elections with respect to his Base Pay and Commissions and/or Bonuses
for any Plan Year shall be effective for the first payroll period beginning on
or after the date the Deferral Elections become effective. To be effective, a
Participant's initial Deferral Elections must be made within the time period
prescribed by the Administrative Committee (generally, before the first day of
the Plan Year in which his Base Pay and Commissions and/or Bonuses will be
earned, or, if later, within 30 days after the date on which his participation
becomes effective pursuant to Plan Section 2.1(b)). If an Eligible Employee
fails to submit Deferral Elections in a timely manner, he shall be deemed to
have elected not to participate in the Plan for that Plan Year.
(ii) SUBSEQUENT DEFERRAL ELECTIONS. A Participant's
subsequent Deferral Elections with respect to his Base Pay and Commissions
and/or Bonuses for any Plan Year must be made on or before the last day of the
Plan Year immediately preceding the Plan Year for which he desires to
participate and in which the Base Pay and Commissions and/or Bonuses to be
deferred are earned.
(b) TERM. Each Participant's Deferral Elections shall remain in
effect for all such Base Pay and Commissions and/or Bonuses payable during a
Plan Year and subsequent Plan Years until the earliest of (i) the date the
Participant ceases to be an active Participant for such Plan Year, or (ii) the
date the Participant makes subsequent Deferral Elections applicable for amounts
earned during a subsequent Plan Year. If a Participant is transferred from the
employment of one Participating Company to the employment of another
Participating Company, his Deferral Elections with the first Participating
Company will remain in effect and will apply to his Base Pay and Commissions
and/or Bonuses from the second Participating Company until the earlier of those
events set forth in the preceding sentence.
(c) AMOUNT. A Participant may elect to defer (1) his Base Pay
and Commissions payable each payroll period in 1 percent increments, up to a
maximum of 20%, and (2) his Bonuses payable in 1 percent increments, up to a
maximum of 40%.
(d) CREDITING OF DEFERRED BASE PAY AND COMMISSIONS AND/OR
BONUSES. For each Plan Year that a Participant has Deferral Elections in effect,
the Administrative Committee shall credit the amount of such Participant's
Deferral Contributions to his Account on, or as soon as practicable after, the
Valuation Date on which such amount would have been paid to him but for his
Deferral Elections.
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3.3 MATCHING CONTRIBUTIONS.
(a) AMOUNT. The Administrative Committee shall credit to each
Participant's Account for each Plan Year a Matching Contribution equal to the
difference between:
(i) 50 percent multiplied by the lesser of (A) the
sum of the maximum amount of deferrals that the Participant could have made to
the Savings and Investment Plan for such Plan Year, plus the Participant's
deferrals to the Plan for such Plan Year, or (B) 4 percent of the Participant's
Compensation for such Plan Year; and
(ii) The amount of matching contributions that would
have been made to the Participant's account under the Savings and Investment
Plan for such Plan Year assuming the Participant deferred the maximum amount
permitted under the Savings and Investment Plan.
(b) TIME OF CREDITING. A Participant's matching contributions
for a Plan Year will be credited to his Account as of the earlier of (i) the
date a Participant's employment with the Controlling Company and all other
members of the Controlled Group terminates during that Plan Year, or (ii) the
first day of the immediately following Plan Year (or such other date or time as
the Administrative Committee, in its sole discretion, determines from
time-to-time).
3.4 DISCRETIONARY CONTRIBUTIONS.
The Administrative Committee may, but shall not be required to,
credit to a Participant's Account for any Plan Year a Discretionary
Contribution. The amount and timing of any such Discretionary Contribution shall
be determined in the discretion of the Administrative Committee.
3.5 IMPACT OF CODE SECTION 409A ON PRIOR DEFERRALS. If the
Administrative Committee determines that Code Section 409A must apply to any
deferral elections made under the Interface, Inc. Nonqualified Saving Plan or
matching contributions related to deferrals under that plan, such deferrals or
matching contributions shall be treated as having been made under this Plan
instead.
3.6 DEBITING OF DISTRIBUTIONS.
As of each Valuation Date, the Administrative Committee shall
debit each Participant's Account for any amount distributed from such Account
since the immediately preceding Valuation Date.
3.7 CREDITING OF EARNINGS.
As of each Valuation Date, the Administrative Committee shall
credit to each Participant's Account the amount of earnings and/or losses
applicable thereto for the period since the immediately preceding Valuation
Date. Such crediting of earnings and/or losses shall be effected as of each
Valuation Date, as follows:
11
(a) RATE OF RETURN. The Administrative Committee shall
first determine a rate of return for the period since the immediately preceding
Valuation Date for each of the Investment Funds;
(b) AMOUNT INVESTED. The Administrative Committee next
shall determine the amount of (i) each Participant's Account that was deemed
invested in each Investment Fund as of the immediately preceding Valuation Date;
plus (ii) the amount of Deferral Contributions and Company Contributions
credited to his Account since the immediately preceding Valuation Date; minus
(iii) the amount of any distributions debited from the amount determined in
clause (A) and (B) since the immediately preceding Valuation Date; and
(c) DETERMINATION OF AMOUNT. The Administrative Committee
shall then apply the rate of return for each Investment Fund for such Valuation
Date (as determined in subsection (a) hereof) to the amount of the Participant's
Account deemed invested in such Investment Fund for such Valuation Date (as
determined in subsection (b) hereof), and the total amount of earnings and/or
losses resulting therefrom shall be credited to such Participant's Account as of
the applicable Valuation Date.
3.8 VESTING.
(a) GENERAL. A Participant shall at all times be fully
vested in his Deferral Contributions, and the earnings credited to his Account
with respect to such Deferral Contributions. The Matching and Discretionary
Contributions credited to a Participant's Account and the earnings credited with
respect thereto shall vest in accordance with the following vesting schedule
based on the Participant's Years of Service:
Years of Service Vested Percentage of Participant's
Completed by Participant Matching and Discretionary Contributions
------------------------ ----------------------------------------
Less than 1 year 0%
1 year or more 20%
2 years or more 40%
3 years or more 60%
4 years or more 80%
5 years or more 100%
Notwithstanding the foregoing, a Participant shall become 100 percent vested in
the Matching and Discretionary Contributions credited to his Account and the
earnings credited with respect thereto upon the occurrence of any of the
following events while the Participant is actively employed by the Controlling
Company or any other member of the Controlled Group: (i) the Participant's
attainment of age 65, (ii) the Participant's Disability, or (iii) the
Participant's death.
(b) CHANGE IN CONTROL. If a Change in Control occurs with
respect to the Controlling Company and a Participant's employment with the
Controlling Company and all other members of the Controlled Group is terminated
(i) within 24 months following the date of the Change in Control, or (ii) within
6 months prior to the date of the Change in Control and is
12
related to such Change in Control, and in the case of either (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination,
then the Participant shall be immediately 100 percent vested in the Matching and
Discretionary Contributions credited to his Account and the earnings credited
with respect thereto as of the later of the date of such Change in Control or
the date of such termination. Matching and Discretionary Contributions credited
to a Participant's Account after the date of a Change in Control and the
earnings credited with respect thereto shall continue to vest in accordance with
the vesting schedule.
3.9 GOOD FAITH VALUATION BINDING.
In determining the value of the Accounts, the Administrative
Committee shall exercise its best judgment, and all such determinations of value
(in the absence of bad faith) shall be binding upon all Participants and their
Beneficiaries.
3.10 ERRORS AND OMISSIONS IN ACCOUNTS
If an error or omission is discovered in the Account of a
Participant or in the amount of a Participant's deferrals, the Administrative
Committee, in its sole discretion, shall cause appropriate, equitable
adjustments to be made as soon as administratively practicable following the
discovery of such error or omission.
13
ARTICLE IV
INVESTMENT FUNDS
----------------
4.1 SELECTION BY ADMINISTRATIVE COMMITTEE.
The Administrative Committee may change, add or remove Investment
Funds on a prospective basis at any time(s) and in any manner it deems
appropriate.
4.2 PARTICIPANT DIRECTION OF DEEMED INVESTMENTS.
Each Participant generally may direct the manner in which his
Account shall be deemed invested in and among the Investment Funds. Any
Participant investment directions permitted hereunder shall be made in
accordance with the following terms:
(a) NATURE OF PARTICIPANT DIRECTION. The selection of
Investment Funds by a Participant shall be for the sole purpose of determining
the rate of return to be credited to his Account, and shall not be treated or
interpreted in any manner whatsoever as a requirement or direction to actually
invest assets in any Investment Fund or any other investment media. The Plan, as
an unfunded, nonqualified deferred compensation plan, at no time shall have any
actual investment of assets relative to the benefits or Accounts hereunder.
However, the Controlling Company may, under Section 7.2, require a Participating
Company to transfer assets to the Trust sufficient to satisfy such Participating
Company's obligations under the Plan, and, at the direction of the Controlling
Company, such assets may be invested in a manner intended to mirror the
performance of the Investment Funds.
(b) INVESTMENT OF CONTRIBUTIONS. Each Participant may
make an Investment Election prescribing the percentage of his future
contributions thereto that will be deemed invested in each Investment Fund. An
initial Investment Election of a Participant shall be made as of the date the
Participant commences participation in the Plan and shall apply to all
contributions credited to such Participant's Account after such date. Such
Participant may make subsequent Investment Elections as of any Valuation Date,
and each such election shall apply to all future contributions credited to such
Participant's Account after the Administrative Committee (or its designee) has a
reasonable opportunity to process such election pursuant to such procedures as
the Administrative Committee may determine from time to time. Any Investment
Election made pursuant to this subsection with respect to future contributions
shall remain effective until changed by the Participant.
(c) INVESTMENT OF EXISTING ACCOUNT BALANCES. Each Participant
may make an Investment Election prescribing the percentage of his existing
Account balance that will be deemed invested in each Investment Fund. Such
Participant may make such Investment Elections as of any Valuation Date, and
each such election shall be effective after the Administrative Committee (or its
designee) has a reasonable opportunity to process such election. Each such
election shall remain in effect until changed by such Participant.
14
(d) ADMINISTRATIVE COMMITTEE DISCRETION. The Administrative
Committee shall have complete discretion to adopt and revise procedures to be
followed in making such Investment Elections. Such procedures may include, but
are not limited to, the process of making elections, the permitted frequency of
making elections, the incremental size of elections, the contribution types to
which such elections apply, the deadline for making elections and the effective
date of such elections. Any procedures adopted by the Administrative Committee
that are inconsistent with the deadlines or procedures specified in this Section
shall supersede such provisions of this Section without the necessity of a Plan
amendment.
15
ARTICLE V
PAYMENT OF ACCOUNT BALANCES
---------------------------
5.1 BENEFIT PAYMENTS UPON SEPARATION FROM SERVICE FOR REASONS OTHER
THAN DEATH.
(a) GENERAL RULE CONCERNING BENEFIT PAYMENTS. At the time
provided in subsection (b) hereof, the Participant (or his Beneficiary, if he
dies before distribution of his Account) shall be entitled to receive or begin
receiving a distribution of the total of: (i) the entire vested amount credited
to his Account, determined as of the Valuation Date on which such distribution
is processed; plus (ii) the vested amount of Deferral, Matching and
Discretionary Contributions made since such Valuation Date; and minus (iii) the
amount of any distributions made to the Participant since such Valuation Date.
For purposes of this subsection, the "Valuation Date on which such distribution
is processed" refers to the Valuation Date established for such purpose by
administrative practice, even if actual payment is made or commenced at a later
date due to delays in valuation, administration or any other procedure. For all
purposes under the Plan, the term "separation from service" shall have the
meaning determined under Code Section 409A and shall include a Participating
Company ceasing to be a member of the Controlled Group to the extent permitted
under Code Section 409A.
(b) TIMING OF DISTRIBUTION.
(i) GENERAL RULE. Except as provided in subsections
(b)(ii), (iii), or (v) hereof, the vested benefit payable to a Participant under
this Section shall be made or commenced as soon as administratively feasible
after the date the Participant separates from service with the Controlling
Company and all other members of the Controlled Group for any reason other than
death.
(ii) BENEFIT COMMENCEMENT DATE ELECTION. A Participant
may elect, at the time he makes a Deferral Election for each Plan Year, to have
his vested Account balance attributable to Deferral, Matching and Discretionary
Contributions (including earnings) for a Plan Year (his "Annual Account
Balance") paid (or commenced) as soon as administratively feasible after the
earlier of any date specified in such Deferral Election (but not earlier than 1
year after the end of the Plan Year for which the Deferral Election applies) or
the date the Participant separates from service. A Participant's election
hereunder will apply to all subsequent years' Annual Account Balances until he
changes it. If a Participant does not make an election hereunder, he shall be
deemed to have elected the date described in subsection (b)(i) hereof as the
benefit commencement date for his vested Account balance.
(iii) MODIFICATIONS OF BENEFIT COMMENCEMENT DATE. With
respect to any initially scheduled benefit commencement date (as determined
in accordance with subsections (b)(i) or (b)(ii) hereof), a Participant who has
not yet reached such initially scheduled benefit commencement date may elect, at
least 1 year before such date, to delay the payment (or commencement) of his
Annual Account Balance payable on such date to a later date, and such Annual
Account Balance shall be paid (or commenced) as soon as administratively
feasible after
16
such delayed date; provided, any election to delay payment will be effective
only if the Participant elects a rescheduled benefit commencement date that is
no earlier than the fifth anniversary of the initially scheduled benefit
commencement date. If a Participant separates from service prior to his modified
benefit commencement date, his Annual Account Balance shall be paid (or commence
to be paid) as soon as administratively feasible after the date the Participant
separates from service with the Controlling Company and all other members of the
Controlled Group for any reason other than death. A Participant may, with
respect to each Annual Account Balance, make no more than 5 elections to delay
his scheduled benefit commencement date, subject to the timing restrictions set
forth above.
(iv) NUMBER OF BENEFIT COMMENCEMENT DATES. A Participant may
elect a different benefit commencement date with respect to each Annual Account
Balance. The Administrative Committee shall cause to be paid (or commence the
payment of) the Participant's benefit as soon as administratively feasible after
the time(s) determined in this subsection (b).
(v) DISTRIBUTIONS TO KEY EMPLOYEES. If a Participant is a
Key Employee and his Annual Account Balance is payable as a result of his
separation from service, his vested benefit shal not be paid (or commence to be
paid) before the date which is 6 months after his separation from service or
such earlier time as may be permitted under applicable law.
5.2 FORM OF DISTRIBUTION.
(a) SINGLE-SUM PAYMENT. Except as provided in subsection
(b) hereof, the benefit payable to a Participant under Section 5.1 shall be
distributed in the form of a single-sum payment.
(b) ANNUAL INSTALLMENTS. A Participant may elect, at the
time he makes a Deferral Election for each Plan Year, to have his Annual Account
Balance payable under Section 5.1 paid in the form of annual installment
payments. To the extent a Participant elects multiple benefit commencement dates
in accordance with Section 5.1(b)(iv), such Participant may elect, at the time
of making such subsequent Deferral Elections, to have the Annual Account
Balances attributable to such elections paid in the form of annual installments
beginning as of such benefit commencement dates. If a Participant does not elect
the installment form of distribution with respect to a benefit commencement
date, his Annual Account Balance corresponding to such benefit commencement date
shall be paid in the form of a single-sum payment unless, at least 1 year before
such benefit commencement date, the Participant makes an election in writing to
receive such Annual Account Balance in the form of installment payments (in
accordance with the terms of this subsection), in which case the first
installment payment will be made on the later of the fifth anniversary of the
initially scheduled benefit commencement date or the rescheduled benefit
commencement date elected in Section 5.1(b)(iii). The following terms and
conditions shall apply to installment payments made under the Plan:
(i) The installment payments shall be made in substantially
equal annual installments over a period of either 5 or 10 years (adjusted for
earnings between payments in the manner described in Section 3.7). The initial
value of the obligation for the installment
17
payments shall be equal to the amount of the Participant's Account balance
calculated in accordance with the terms of Section 5.1(a).
18
(ii) If a Participant dies after payment of his
benefit from the Plan has begun, but before his entire benefit has been
distributed, the remaining amount of his Account balance shall be distributed to
the Participant's designated Beneficiary in the form of a single-sum payment.
(iii) Notwithstanding a Participant's election of
installment payments under this subsection (b), if the Participant's employment
with the Controlling Company and all other members of the Controlled Group
terminates before he has participated in the Plan for at least 5 full Plan
Years, his benefit shall be paid in the form of a single-sum payment.
5.3 DEATH BENEFITS.
If a Participant dies before payment of his benefit from the
Plan is made or commenced, the Beneficiary or Beneficiaries designated by such
Participant in his latest beneficiary designation form filed with the
Administrative Committee shall be entitled to receive a distribution of the
total of (i) the entire vested amount credited to such Participant's Account,
determined as of the Valuation Date on which such distribution is processed;
plus (ii) the vested amount of Deferral, Matching and Discretionary
Contributions made since such Valuation Date; and minus (iii) the amount of any
distributions made to the Participant since such Valuation Date. For purposes of
this Section, the "Valuation Date on which such distribution is processed"
refers to the Valuation Date established for such purpose by administrative
practice, even if actual payment is made at a later date due to delays in
valuation, administration or any other procedure. The benefit shall be
distributed to such Beneficiary or Beneficiaries, as soon as administratively
feasible after the date of the Participant's death, in the form of a single-sum
payment.
5.4 HARDSHIP DISTRIBUTIONS. Upon receipt of an application for an
in-service hardship distribution and the Administrative Committee's decision,
made in its sole discretion, that a Participant has suffered a Financial
Hardship, such Participant shall be entitled to receive an in-service
distribution. Such distribution shall be paid in a single-sum payment as soon as
administratively feasible after the Administrative Committee determines that the
Participant has incurred a Financial Hardship. The amount of such single-sum
payment shall be limited to the amount that the Administrative Committee
determines is reasonably necessary to meet the Participant's requirements
resulting from the Financial Hardship plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution. The amount of such
distribution shall reduce the Participant's Account balance as provided in
Section 3.6. Notwithstanding anything in this Section 5.4 to the contrary, all
hardship distributions shall be subject to the requirements applicable to
distributions on account of unforeseeable emergency under Code Section 409A.
5.5 BENEFICIARY DESIGNATION.
(a) GENERAL. Participants shall designate and from time
to time may redesignate their Beneficiaries in such form and manner as the
Administrative Committee may determine.
19
(b) NO DESIGNATION OR DESIGNEE DEAD OR MISSING. In the event
that:
(1) a Participant dies without designating a
Beneficiary;
(2) the Beneficiary designated by a Participant is not
surviving when a payment is to be made to such person under the Plan, and no
contingent Beneficiary has been designated; or
(3) the Beneficiary designated by a Participant cannot
be located by the Administrative Committee within 1 year from the date benefits
are to be paid to such person;
then, in any of such events, the Beneficiary of such Participant with respect to
any benefits that remain payable under the Plan shall be the Participant's
Surviving Spouse, if any, and if not, the estate of the Participant.
5.6 TAXES.
If the whole or any part of any Participant's or Beneficiary's
benefit hereunder shall become subject to any estate, inheritance, income or
other tax which the Participating Companies shall be required to pay or
withhold, the Participating Companies shall have the full power and authority to
withhold and pay such tax out of any monies or other property in its hand for
the account of the Participant or Beneficiary whose interests hereunder are so
affected. Prior to making any payment, the Participating Companies may require
such releases or other documents from any lawful taxing authority as it shall
deem necessary. Notwithstanding anything in the Plan to the contrary, the
distribution of a Participant's benefit hereunder prior to his termination of
employment with the Company shall be limited such that, to the extent the
distribution causes the Participant's compensation to exceed the amount that the
Administrative Committee determines would be deductible under Code Section
162(m), such excess does not exceed $500,000.
20
ARTICLE VI
CLAIMS
------
6.1 CLAIMS.
(a) PROCEDURE. Claims for benefits under the Plan may be
filed with the Administrative Committee on forms or in such other written
documents, as the Administrative Committee may prescribe in accordance with
subsection (a)(1) or (a)(2) hereof, as applicable.
(1) GENERALLY. Except as provided in subsection (a)(2)
hereof, the Administrative Committee shall furnish to the claimant written
notice of the disposition of a claim within 90 days after the application
therefor is filed. In the event the claim is denied, the notice of the
disposition of the claim shall provide the specific reasons for the denial,
citations of the pertinent provisions of the Plan, and, where appropriate, an
explanation as to how the claimant can perfect the claim and/or submit the claim
for review.
(2) CLAIMS BASED ON AN INDEPENDENT DETERMINATION OF
DISABILITY. With respect to a claim for benefits under the Plan based on
Disability, the Administrative Committee shall furnish to the claimant written
notice of the disposition of a claim within 45 days after the application
therefor is filed; provided, if matters beyond the control of the Administrative
Committee require an extension of time for processing the claim, the
Administrative Committee shall furnish written notice of the extension to the
claimant prior to the end of the initial 45-day period, and such extension shall
not exceed one additional, consecutive 30-day period; and, provided further, if
matters beyond the control of the Administrative Committee require an additional
extension of time for processing the claim, the Administrative Committee shall
furnish written notice of the second extension to the claimant prior to the end
of the initial 30-day extension period, and such extension shall not exceed an
additional, consecutive 30-day period. Notice of any extension under this
subsection (a)(2) shall specifically explain the standards on which entitlement
to a benefit is based, the unresolved issues that prevent a decision on the
claim, and the additional information needed to resolve those issues. In the
event the claim is denied, the notice of the disposition of the claim shall
provide the specific reasons for the denial, cites of the pertinent provisions
of the Plan, an explanation as to how the claimant can perfect the claim and/or
submit the claim for review (where appropriate), and a statement of the
claimant's right to bring a civil action under ERISA Section 502(a) following an
adverse determination on review.
(b) REVIEW PROCEDURE. Any Participant or Beneficiary who
has been denied a benefit shall be entitled, upon request to the Administrative
Committee, to appeal the denial of his claim in accordance with subsection
(b)(1) or (b)(2) hereof, as applicable.
(1) GENERALLY. Except as provided in subsection (b)(2)
hereof, the claimant (or his duly authorized representative) may review
pertinent documents related to the Plan and in the Administrative Committee's
possession in order to prepare the appeal. The request for review, together with
written statement of the claimant's position, must be filed with the
Administrative Committee no later than 60 days after receipt of the written
notification of
21
denial of a claim provided for in subsection (a). The Administrative Committee's
decision shall be made within 60 days following the filing of the request for
review. If unfavorable, the notice of the decision shall explain the reasons for
denial and indicate the provisions of the Plan or other documents used to arrive
at the decision.
(2) CLAIMS BASED ON AN INDEPENDENT DETERMINATION OF
DISABILITY. With respect to an appeal of a denial of benefits under the Plan
based on Disability, the claimant or his duly authorized representative may
review pertinent documents related to the Plan and in the Administrative
Committee's possession in order to prepare the appeal. The form containing the
request for review, together with a written statement of the claimant's
position, must be filed with the Administrative Committee no later than 180 days
after receipt of the written notification of denial of a claim provided for in
subsection (a) hereof. The Administrative Committee's decision shall be made
within 45 days following the filing of the request for review and shall be
communicated in writing to the claimant; provided, if special circumstances
require an extension of time for processing the appeal, the Administrative
Committee shall furnish written notice to the claimant prior to the end of the
initial 45-day period, and such an extension shall not exceed one additional
45-day period. The Administrative Committee's review shall not afford deference
to the initial adverse benefit determination and shall be conducted by an
individual who is neither the individual who made the adverse benefit
determination that is the subject of the appeal, nor the subordinate of such
individual. In deciding an appeal of any adverse benefit determination that is
based in whole or in part on a medical judgment, the Administrative Committee
shall consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical judgment and who is
neither an individual who was consulted in connection with the adverse benefit
determination that is the subject of the appeal, nor the subordinate of any such
individual. If unfavorable, the notice of decision shall explain the reason or
reasons for denial, indicate the provisions of the Plan or other documents used
to arrive at the decision, state the claimant's right to bring a civil action
under ERISA Section 502(a), and identify all medical or vocational experts whose
advice was obtained by the Administrative Committee in connection with a
claimant's adverse benefit determination.
(c) SATISFACTION OF CLAIMS. Any payment to a Participant
or Beneficiary shall to the extent thereof be in full satisfaction of all claims
hereunder against the Administrative Committee and the Participating Companies,
any of whom may require such Participant or Beneficiary, as a condition to such
payment, to execute a receipt and release therefor in such form as shall be
determined by the Administrative Committee or the Participating Companies. If
receipt and release is required but the Participant or Beneficiary (as
applicable) does not provide such receipt and release in a timely enough manner
to permit a timely distribution in accordance with the general timing of
distribution provisions in the Plan, the payment of any affected distribution
may be delayed until the Administrative Committee or the Participating Companies
receive a proper receipt and release.
22
ARTICLE VII
SOURCE OF FUNDS; TRUST
----------------------
7.1 SOURCE OF FUNDS.
Except as provided in this Section and Section 7.2 (relating
to the Trust), each Participating Company shall provide the benefits described
in the Plan from its general assets. However, to the extent that funds in such
Trust allocable to the benefits payable under the Plan are sufficient, the Trust
assets may be used to pay benefits under the Plan. If such Trust assets are not
sufficient to pay all benefits due under the Plan, then the appropriate
Participating Company shall have the obligation, and the Participant or
Beneficiary who is due such benefits shall look to such Participating Company,
to provide the remaining portion of such benefits.
7.2 TRUST.
(a) ESTABLISHMENT. To the extent determined by the
Controlling Company, the Participating Companies shall transfer the funds
necessary to fund benefits accrued hereunder to the Trustee to be held and
administered by the Trustee pursuant to the terms of the Trust Agreement. Except
as otherwise provided in the Trust Agreement, each transfer into the Trust Fund
shall be irrevocable as long as a Participating Company has any liability or
obligations under the Plan to pay benefits, such that the Trust property is in
no way subject to use by the Participating Company; provided, it is the intent
of the Controlling Company that the assets held by the Trust are and shall
remain at all times subject to the claims of the general creditors of the
Participating Companies.
(b) DISTRIBUTIONS. Pursuant to the Trust Agreement, the
Trustee shall make payments to Plan Participants and Beneficiaries in accordance
with the terms of the Plan. The Participating Company shall make provisions for
the reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay, or cause to be paid, amounts withheld to the
appropriate taxing authorities.
(c) STATUS OF THE TRUST. No Participant or Beneficiary
shall have any interest in the assets held by the Trust or in the general assets
of the Participating Companies other than as a general, unsecured creditor.
Accordingly, a Participating Company shall not grant a security interest in the
assets held by the Trust in favor of the Participants, Beneficiaries or any
creditor.
(d) CHANGE IN CONTROL. As soon as possible but in no
event longer than 30 days after the Change in Control, the Participating
Companies shall make an irrevocable transfer to the Trustee of an amount that is
sufficient to pay each Plan Participant or Beneficiary the benefits to which
Plan Participants or their Beneficiaries would be entitled pursuant to the terms
of the Plan as of the date on which the Change in Control occurred. In such
event, an independent bank or financial institution shall serve as Trustee. The
terms of the Trust Agreement shall require the Trustee to make payments in
accordance with the terms of the Plan and shall prohibit the Trustee from
permitting a reversion to the Controlling Company or any member of the
Controlled Group of any Trust assets until the Participating Companies'
23
obligations under the Plan shall be satisfied in full. The terms of the Trust
Agreement also shall prohibit the investment in any equity interests of the
Controlling Company or any member of the Controlled Group with any cash (or
investment earnings attributable thereto) contributed with respect to the
obligations hereunder. Notwithstanding this mandatory funding of the Trust, if
the Trust Fund is insufficient or the Trustee for any reason is unable or
unwilling to make the payments required hereunder, the Participating Companies
shall make such payments.
24
ARTICLE VIII
ADMINISTRATIVE COMMITTEE
------------------------
8.1 ACTION.
Action of the Administrative Committee may be taken with or without
a meeting of committee members; provided, action shall be taken only upon the
vote or other affirmative expression of a majority of the committee members
qualified to vote with respect to such action. If a member of the committee is a
Participant or Beneficiary, he shall not participate in any decision which
solely affects his own benefit under the Plan. For purposes of administering the
Plan, the Administrative Committee shall choose a secretary who shall keep
minutes of the committee's proceedings and all records and documents pertaining
to the administration of the Plan. The secretary may execute any certificate or
any other written direction on behalf of the Administrative Committee.
8.2 RIGHTS AND DUTIES.
The Administrative Committee shall administer the Plan and shall
have all powers necessary to accomplish that purpose, including (but not
limited to) the following:
(a) To construe, interpret and administer the Plan;
(b) To make determinations required by the Plan, and to
maintain records regarding Participants' and Beneficiaries' benefits hereunder;
(c) To compute and certify to the Participating Companies
the amount and kinds of benefits payable to Participants and Beneficiaries, and
to determine the time and manner in which such benefits are to be paid;
(d) To authorize all disbursements by the Participating
Companies pursuant to the Plan;
(e) To maintain all the necessary records of the administration
of the Plan;
(f) To make and publish such rules for the regulation of the
Plan as are not inconsistent with the terms hereof;
(g) To delegate to other individuals or entities from time to
time the performance of any of its duties or responsibilities hereunder;
(h) To hire agents, accountants, actuaries, consultants and
legal counsel to assist in operating and administering the Plan.
25
The Administrative Committee shall have the exclusive right to construe and
interpret the Plan, to decide all questions of eligibility for benefits and to
determine the amount of such benefits, and its decisions on such matters shall
be final and conclusive on all parties.
8.3 COMPENSATION, INDEMNITY AND LIABILITY.
The Administrative Committee and its members shall serve as
such without bond and without compensation for services hereunder. All expenses
of the Administrative Committee shall be paid by the Participating Companies. No
member of the committee shall be liable for any act or omission of any other
member of the committee, nor for any act or omission on his own part, excepting
his own willful misconduct. The Participating Companies shall indemnify and hold
harmless the Administrative Committee and each member thereof against any and
all expenses and liabilities, including reasonable legal fees and expenses,
arising out of his membership on the committee.
26
ARTICLE IX
AMENDMENT AND TERMINATION
-------------------------
9.1 AMENDMENTS.
The Administrative Committee shall have the right, in its sole
discretion, to amend the Plan in whole or in part at any time and from time to
time. Any amendment shall be in writing and executed by a duly authorized
officer of the Controlling Company. An amendment to the Plan may modify its
terms in any respect whatsoever, and may include, without limitation, a
permanent or temporary freezing of the Plan such that the Plan shall remain in
effect with respect to existing Account balances without permitting any new
contributions; provided, no such action may reduce the amount already credited
to a Participant's Account without the affected Participant's written consent.
All Participants and Beneficiaries shall be bound by such amendment.
9.2 TERMINATION OF PLAN.
The Controlling Company reserves the right to discontinue and
terminate the Plan at any time, for any reason. Any action to terminate the Plan
shall be taken by the Administrative Committee in the form of a written Plan
amendment executed by either the President, Chief Financial Officer or General
Counsel of the Controlling Company. If the Plan is terminated, each Participant
shall become 100 percent vested in his Account which shall be distributed in a
single-sum as soon as practicable after the date the Plan is terminated,
provided that such distribution is permitted under Code Section 409A. The amount
of any such distribution shall be determined as of the Valuation Date such
termination distribution is to be processed. Such termination shall be binding
on all Participants and Beneficiaries.
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ARTICLE X
MISCELLANEOUS
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10.1 TAXATION.
It is the intention of the Controlling Companies that the benefits
payable hereunder shall not be deductible by the Participating Companies nor
taxable for federal income tax purposes to Participants or Beneficiaries until
such benefits are paid by the Participating Companies, or the Trust, as the case
may be, to such Participants or Beneficiaries. Without limiting the foregoing,
it is intended that the Plan meet the requirements of Code Section 409A, and the
Administrative Committee shall use its reasonable best efforts to interpret and
administer the Plan in accordance with such requirements. Any provision of the
Plan that is inconsistent with the requirements of Code Section 409A or the
regulations promulgated thereunder shall be deemed to be modified, without
further action of any party, to conform to such requirements. Subject to Section
5.6, it is the intention of the Participating Companies that benefits paid under
the Plan shall be deductible by the Participating Companies under Code Section
162.
10.2 NO EMPLOYMENT CONTRACT.
Nothing herein contained is intended to be nor shall be construed
as constituting a contract or other arrangement between a Participating Company
and any Participant to the effect that the Participant will be employed by the
Participating Company for any specific period of time.
10.3 HEADINGS.
The headings of the various articles and sections in the Plan
are solely for convenience and shall not be relied upon in construing any
provisions hereof. Any reference to a section shall refer to a section of the
Plan unless specified otherwise.
10.4 GENDER AND NUMBER.
Use of any gender in the Plan will be deemed to include all
genders when appropriate, and use of the singular number will be deemed to
include the plural when appropriate, and vice versa in each instance.
10.5 ASSIGNMENT OF BENEFITS.
The right of a Participant or his Beneficiary to receive
payments under the Plan may not be anticipated, alienated, sold, assigned,
transferred, pledged, encumbered, attached or garnished by creditors of such
Participant or Beneficiary, except by will or by the laws of descent and
distribution and then only to the extent permitted under the terms of the Plan.
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10.6 LEGALLY INCOMPETENT.
The Administrative Committee, in its sole discretion, may
direct that payment be made to an incompetent or disabled person, whether
because of minority or mental or physical disability, to the guardian of such
person or to the person having custody of such person, without further liability
on the part of a Participating Company for the amount of such payment to the
person on whose account such payment is made.
10.7 GOVERNING LAW.
The Plan shall be construed, administered and governed in all
respects in accordance with applicable federal law (including ERISA) and, to the
extent not preempted by federal law, in accordance with the laws of the State of
Georgia. If any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective.
IN WITNESS WHEREOF, the Controlling Company has caused the Plan to be
executed by its duly authorized officer on the 24th day of November, 2004.
INTERFACE, INC.
By: /s/ Raymond S. Willoch
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Title: Senior Vice President
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