EXHIBIT 10.13
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of November 22,
2000, by and between Dal-Tile International Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx (the "Executive").
The Company is engaged in the business of the manufacture, distribution
and marketing of glazed and unglazed tile. The Company desires to employ the
Executive and the Executive desires to accept such employment on the terms and
conditions of this Agreement.
The Executive has served as President and Chief Executive of the
Company since July 1, 1997 pursuant to an Employment Agreement dated as of June
13, 1997 and amended as of October 10, 1997, and as of July 17, 1998 (the "Prior
Employment Agreement"). The Company and the Executive desire to extend the term
of the Prior Employment Agreement and amend certain other of its provisions.
NOW, THEREFORE, in consideration of the mutual premises and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Prior Employment Agreement is
hereby amended and restated as follows:
1. TERM OF EMPLOYMENT. The term of the Executive's employment
under this Agreement (the "Term") shall commence on July 1,
1997 and continue through and expire on December 31, 2004
unless earlier terminated as herein provided.
2. DUTIES OF EMPLOYMENT. The Executive hereby agrees for the Term
to render his exclusive services to the Company as (subject to
the last sentence of this Section 2) its President and Chief
Executive Officer and, in connection therewith, to perform
such duties commensurate with his office as he shall
reasonably be directed by the Board of Directors of the
Company (the "Board") to perform. The Executive shall devote
during the Term all of his business time, energy, and skill to
his executive duties hereunder and perform such duties
faithfully and efficiently, except for reasonable vacations
and except for periods of illness or incapacity. When and if
requested to do so by the Board, the Executive shall serve as
a director of the Company and a director and officer of any
subsidiary or affiliate of the Company, provided that the
Executive shall be indemnified for liabilities incurred by him
in his capacity as a Director or an Officer in accordance with
an Indemnification Agreement in the form attached hereto as
Exhibit A and as provided in the Company's Certificate of
Incorporation and By-Laws as in effect from time to time. From
and after January 1, 2004, with the prior written consent of
the Board, the Executive may resign from his position as
President and Chief Executive Officer of the Company; it being
understood that in such event (i) the Executive shall be
obligated at the request of the Board to serve as its Chairman
for the remainder of the Term, (ii) the Executive shall
continue to perform services exclusively for the Company for
the remainder of the Term as the Board shall direct consistent
with his position as Chairman, (iii) the Annual Salary and
Annual Bonus shall remain the same, unless the Board and the
Executive shall reasonably agree otherwise and (iv) such
resignation, and any circumstances directly or indirectly
related thereto, shall not constitute Good Reason (as defined
below).
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3. COMPENSATION AND OTHER BENEFITS.
3.1 SALARY. Effective commencing December 1, 2000, as
compensation for all services to be rendered by the
Executive during the Term, the Company shall pay to
the Executive a salary at the annual rate of $700,000
per year (which may be increased from time to time by
the Board (the "Annual Salary")), payable in
accordance with the Company's usual payroll practices
for executives. Executive shall be eligible to
receive annual salary reviews and salary increases as
authorized by the Board.
3.2 ANNUAL BONUS. In addition to his Annual Salary, the
Executive shall be eligible to be paid a bonus in
respect of each fiscal year of the Company (the
"Annual Bonus") in accordance with the Company's
bonus plan (the "Plan"), which Annual Bonus shall be
determined by the Compensation Committee of the Board
and which bonus shall be paid not later than 120 days
after the end of such fiscal year. The amount of the
bonus opportunity shall be 100% of the amount of the
Annual Salary upon attainment of the "target"
performance level. The minimum amount of Annual Bonus
to be paid to Executive shall be fifty percent (50%)
of Executive's Annual Salary, and the maximum amount
of Annual Bonus to be paid to Executive shall be two
hundred percent (200%) of Executive's Annual Salary,
unless otherwise mutually agreed to in writing by the
Executive and the Board.
3.3 STOCK OPTION AGREEMENT. The Company shall
simultaneously herewith grant Executive options (the
"Options") to purchase (i) 2,000,000 shares of Common
Stock at an exercise price of $12.63 per share and
(ii) 1,000,000 shares of Common Stock at an exercise
price of $13.89 per share, on the date hereof on the
terms and conditions set forth in the Option Plan and
Stock Option Agreements to be entered into (the
"Stock Option Agreements") in the forms attached
hereto. All stock options granted by the Company to
Executive prior to the date hereof shall remain in
full force and effect in accordance with their terms
and such options shall be referred to herein as the
"Existing Options."
3.4 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. During the
Term, the Executive shall be permitted to participate
in any group life, hospitalization or disability
insurance plan, health program, pension plan, similar
benefit plan or other so-called "fringe benefit
programs" of the Company as now existing or as may
hereafter be revised or adopted.
4. COVENANTS AGAINST COMPETITION. In order to induce the Company
to enter into the Prior Employment Agreement, the Existing
Options, this Agreement, the Stock Option Agreements, and the
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Management Subscription Agreement between Executive and
Company dated as of July 17, 1998 (the "Management Subscription
Agreement"), the Executive hereby agrees as follows:
4.1 ACKNOWLEDGMENTS OF EXECUTIVE. The Executive
acknowledges that (i) the Company and any affiliates
or subsidiaries thereof that are currently existing
or are acquired or formed during the Restricted
Period, as hereinafter defined (collectively, the
"Companies"), are and will be engaged primarily in
the business of the manufacture, distribution and
marketing of glazed and unglazed tile (the "Company
Business"); (ii) his work for the Companies will give
him access to trade secrets of and confidential
information concerning the Companies, including,
without limitation, information concerning its
organization, business and affairs, organization and
operations, "know-how", customer lists, details of
client or consultant contracts, pricing policies,
financial information, operational methods, marketing
plans or strategies, business acquisition plans, new
personnel acquisition plans, technical processes,
projects of the Companies, financing projections,
budget information and procedures, marketing plans or
strategies, and research products (collectively, the
"Trade Secrets"); and (iii) the agreements and
covenants contained in this Section 4 are essential
to protect the Company Business and goodwill of the
Companies.
4.2 RESTRICTIONS ON COMPETITION. During the Term and
for a two-year period after the end of the Term
(the "Restricted Period") unless this Agreement is
terminated in accordance with the provisions of
Section 5.4, the Executive shall not in any place
where the Company Business is now or hereafter
conducted by any of the Companies while the
Executive is an employee, agent, officer, director
or shareholder of the Companies, directly or
indirectly (a) engage in the Company Business for
his own account; (b) enter the employ of, or
render any services to any person or entity
engaged in the Company Business; or (c) become
interested in any such person or entity in any
capacity, including, without limitation, as an
individual, partner, shareholder, officer,
director, principal, agent trustee or consultant;
provided, however, that the Executive may own,
directly or indirectly, solely as an investment,
securities of any entity traded on any national
securities exchange or registered pursuant to
Section 12(g) of the Securities Exchange Act of
1934 if the Executive is not a controlling person
of, or a member of a group which controls, such
entity and does not directly or indirectly, own 3%
or more of any class of securities of such entity.
The Company shall notify the Executive of any
additional entities which may hereafter become
"Companies" within the meaning of this Agreement.
4.3 CONFIDENTIAL INFORMATION, PERSONAL RELATIONSHIPS.
During the Restricted Period, the Executive shall
keep secret and retain in strictest confidence,
and shall not use for the benefit of himself or
others, all confidential matters and Trade Secrets
of the Companies, except in the ordinary course of
performance by the Executive of his obligations
hereunder.
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4.4 PROPERTY OF THE COMPANIES. All memoranda, notes,
lists, records and other documents or papers, (and
all copies thereof), including such items stored
in computer memories, on microfiche or by any
other means, made or compiled by or on behalf of
the Executive, or made available to the Executive
relating to the Companies are and shall be the
Companies' property and shall be delivered to the
Companies upon the expiration of the Term unless
requested earlier by the Companies.
4.5 EMPLOYEES OF THE COMPANIES. The Executive
acknowledges that any attempt on the part of the
Executive to induce any employee of any of the
Companies to leave any of the Companies' employ,
would be harmful and damaging to the Companies.
During the Restricted Period, the Executive will
not without the prior agreement of the Companies,
in any way, directly or indirectly: (i) induce or
attempt to induce any employee to terminate
employment with the Companies; (ii) disrupt the
Companies' relationship with any employee; or
(iii) solicit or entice any person employed by the
Companies.
4.6 BUSINESS OPPORTUNITIES. The Executive acknowledges
that the Companies have been considering, and
during the Term may consider, the acquisition of
various entities engaged in the Company Business
and that it would be harmful and damaging to the
Companies if he were to become interested in any
such entity without the Company's prior consent.
During the Restricted Period, the Executive will
not without the Company's prior consent become
interested in any such entity in any capacity,
including, without limitation, as an individual,
partner, shareholder, officer, director, principal,
agent trustee or consultant, if the Executive was
aware at any time during the Term that the
Companies had been considering the acquisition of
such entity.
4.7 RESTRICTIVE COVENANTS. For the purposes of this
Agreement all matters discussed in Sections 4.1,
4.2, 4.3, 4.4, 4.5 and 4.6 of this Agreement shall
be referred to as the "Restrictive Covenants."
4.8 RIGHTS AND REMEDIES UPON BREACH. If the Executive
breaches, or threatens to commit a breach of, any
of the provisions of the Restrictive Covenants,
the Company shall have the following rights and
remedies with respect to the Executive, each of
which rights and remedies shall be independent of
the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any
other rights and remedies available to the Company
under law or in equity.
4.8.1 SPECIFIC PERFORMANCE. The right and
remedy to have the Restrictive
Covenants specifically enforced, it
being agreed that any breach or
threatened breach, of the
Restrictive Covenants would cause
irreparable injury to the Company
and money damages will not provide
an adequate remedy to the Company.
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4.8.2 ACCOUNTING. The right and remedy to
require the Executive to account
for and pay over to the Company all
compensation, profits, monies,
accruals, increments or other
benefits derived or received by him
as a result of any transactions
constituting a breach of the
Restrictive Covenants.
4.8.3 SEVERABILITY OF COVENANTS. The
Executive acknowledges and agrees
that the Restrictive Covenants are
reasonable and valid in
geographical and moral scope and in
all other respects. If any court
determines that any of the
Restrictive Covenants, or any part
thereof, are invalid or
unenforceable, the remainder of the
Restrictive Covenants shall not
thereby be affected and shall be
given full effect without regard to
the invalid portions.
4.8.4 BLUE-PENCILLING. If it is
determined that any of the
Restrictive Covenants, or any part
thereof, is unenforceable because
of the duration or geographic scope
of such provision, the duration or
scope of such provision, as the
case may be, shall be reduced so
that such provisions becomes
enforceable and, in its reduced
form, such provision shall then be
enforceable.
4.9 ENFORCEABILITY IN JURISDICTION. The Company and
the Executive intend to and hereby confer
jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the
states or countries in which the Company does
business. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the
Company and the Executive that such determination
not bar or in any way affect the Company's right
to relief provided above in the courts of any
other jurisdiction within the geographical scope
of the Restrictive Covenants, as to breaches of
such Restrictive Covenants in such other
respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse
and independent covenants.
5. TERMINATION.
5.1 TERMINATION UPON DEATH. If the Executive dies during
the Term, this Employment Agreement shall terminate
immediately, except that the Executive's legal
representatives shall be entitled to receive any
Annual Salary to the extent such Annual Salary has
accrued and remains payable up to the date of the
Executive's death (to be paid in a lump sum within 10
days of the termination), plus a portion of the
Executive's Annual Bonus, as set forth in Section
3.2, computed on a pro rata basis based on the
performance of the Company from the beginning of the
relevant bonus period to the date of Executive's
death (to be paid
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as promptly as practicable, but no later than 10
days after the determination thereof), and any
benefits to which the Executive, his heirs, or
legal representatives may be entitled under and in
accordance with the terms of any employee benefits
plan or program maintained by the Company.
5.2 TERMINATION UPON DISABILITY. If the Executive becomes
disabled during his employment hereunder so that he
is unable substantially to perform his services
hereunder for 180 consecutive days, then the term of
this Agreement may be terminated by resolution of the
Board sixty days after the expiration of such 180
days, such termination to be effective upon delivery
of written notice to the Executive of the adoption of
such resolution; provided, that the Executive shall
be entitled to receive any accrued and unpaid Annual
Salary through such effective date of termination (to
be paid in a lump sum within 10 days of the
termination), plus a portion of the Executive's
Annual Bonus, as set forth in Section 3.2, computed
on a pro rata basis based on the performance of the
Company from the beginning of the relevant bonus
period to the date of termination (to be paid as
promptly as practicable, but no later than 10 days
after the determination thereof; it being understood
that the Executive shall make the determination
whether the calculation and payment of the bonus
shall be made immediately after the effective date of
the termination or after the end of the fiscal year
of the termination), and any benefits to which the
Executive may be entitled under and in accordance
with the terms of any employee benefits plan or
program maintained by the Company.
5.3 TERMINATION FOR CAUSE. The Company has the right at
any time during the Term, subject to all of the
provisions hereof, exercisable by serving notice,
effective in accordance with its terms, to terminate
the Executive's employment under this Agreement and
discharge the Executive for "Cause" (as defined
below). If such right is exercised, the Executive
shall be entitled to receive unpaid and accrued
Annual Salary prorated through the date of such
termination, any benefits vested as of the date of
such termination and any other compensation or
benefits otherwise required to be paid under
applicable law. Except for such payments, the Company
shall be under no further obligation to the
Executive. As used in this Section 5, the term
"Cause" shall mean (i) the conviction of or plea of
guilty by the Executive of any felony or other
serious crime involving the Company, or (ii) gross
negligence or willful misconduct by the Executive in
the performance of his duties hereunder; provided
however, that no act shall be considered gross or
willful misconduct if the Executive believes he was
acting in good faith or in a manner not opposed to
the interests of the Company. The Company shall be
entitled to terminate the Executive for Cause only
upon approval of a resolution adopted by the
affirmative vote of not less than two-thirds of the
membership of the Board (excluding Executive). The
Company agrees to provide to the Executive prior
written notice (the "Notice") of its intention to
terminate Executive's employment for Cause, such
notice to state in detail the particular acts or
failures to act which constitute grounds for the
termination. The Executive shall be entitled to a
hearing before the Board to contest the Board's
findings, and to be accompanied by counsel. Such
hearing shall be held within 15 days of the
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request thereof to the Company by the Executive,
provided that such request must be made within 15
days of delivery of the Notice. If, following any
such hearing, the Board maintains its
determination to terminate the Executive's
employment for Cause, the effective date of such
termination shall be as specified in the Notice.
5.4 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The
Company shall have the right at any time during the
Term to terminate the Executive's employment
hereunder without Cause. Upon such a termination or
the termination by the Executive for Good Reason, the
Company's sole obligation hereunder, except as
otherwise provided in Section 3.4, shall be to pay to
the Executive (i) an amount equal to any Annual
Salary accrued and due and payable to the Executive
hereunder on the date of termination (to be paid in a
lump sum within 10 days of the termination), (ii)
thereafter all Annual Salary for the remainder of the
Term, to be paid in a lump sum within 10 days of the
termination, (iii) in a lump sum payment (to be paid
as promptly as practicable, but no later than 10 days
after the determination thereof; it being understood
that the Executive shall make the determination
whether the calculation and payment of the bonus
shall be made immediately after the effective date of
the termination or after the end of the fiscal year
of the termination), the greater of (A) a portion of
the Executive's Annual Bonus as set forth in Section
3.2 computed on a pro rated basis based on the
performance of the Company from the beginning of the
bonus period to the date of termination and (B) an
amount equal to the amount of the Annual Bonus for
the fiscal year preceding the fiscal year in which
the date of termination occurs, pro rated based on
the number of days elapsed in the year of
termination. For purposes of this Agreement, "Good
Reason" shall mean (i) a reduction in the Annual
Salary or bonus opportunity as specified in Section
3.1 or 3.2, (ii) a relocation of the Company's
headquarters or required relocation of the Executive
more than 100 miles outside of the Dallas/Fort Worth
Metropolitan area, (iii) a material diminution in the
Executive's duties or responsibilities, (iv) an
adverse change in the Executive's title, (v)
assignment to Executive of duties and
responsibilities that are inconsistent with his
position in any material respect or (vi) failure of
the Board to nominate Executive for election to the
Board, or removal of the Executive from the Board
without his consent.
5.5 TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In
the event Executive's employment is terminated in
connection with a Change of Control (as such term is
defined in a Change of Control Agreement between
Executive and Company dated as of October 1, 2000
(the "Change of Control Agreement")) under
circumstances pursuant to which Executive is entitled
to payments under the Change of Control Agreement,
Executive shall be entitled to such payments as are
provided under such agreement in lieu of the payments
provided in this Section 5. It is the intent of both
Company and Executive that this Agreement in no way
shall impair Executive's rights and obligations, and
Company's rights and obligations, under such Change
of Control Agreement. However, to the extent that
this Agreement and the Change of Control Agreement
shall conflict, it is the intent of the Company and
the Executive that such agreements shall be
interpreted
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in a manner such that Executive receives the
greater of (i) the payment or benefit provided
under this Agreement or (ii) the payment or
benefit provided under the Change of Control
Agreement, but that in no event shall Executive be
entitled to receive payments or benefits under
both agreements to the extent such payments or
benefits are duplicative.
5.6 OTHER. Except as otherwise provided herein, upon the
expiration or other termination of this Agreement
including the resignation of Executive, all
obligations of the Company shall forthwith terminate,
except as to any stock option rights as provided in
the Stock Option Agreements, the Existing Options,
and the Right (as defined below) as provided in the
SAR Agreement (as defined below) and except as
otherwise required by applicable law.
6. EXPENSES.
During the Term, the Executive will be reimbursed for his
reasonable professional and personal expenses incurred for
the benefit of the Company in accordance with the general
policy of the Company or directives and guidelines
established by management of the Company and upon
submission of documentation satisfactory to the Company.
Such expenses shall include, but shall not be limited to,
travel, entertainment, club dues and promotional expenses
and transportation expenses. With respect to any expenses
that are to be reimbursed by the Company to the Executive,
the Executive shall be reimbursed upon his presenting to
the Company an itemized expense voucher.
7. OTHER PROVISIONS.
7.1 NOTICES. Any notice or other communication required
or permitted hereunder shall be in writing and shall
be delivered personally, telegraphed, telexed, sent
by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date
of deposit in the United States mail, as follows:
(i) if to the Company, to:
Dal-Tile International Inc.
0000 Xxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
(ii) if to the Executive, to: with a copy to:
Xxxxxxx X. Xxxxxx Xxx X. Xxxxxx, Esq.
0000 Xxxxxx Xxxx Benesch, Friedlander,
Xxxxxx & Xxxxxxx, XXX
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Xxxxxx, XX 00000 0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Any party may change its address for notice hereunder by notice to
the other parties hereto.
7.2 ENTIRE AGREEMENT. This Agreement, the Management
Subscription Agreement, the SAR Agreement, the
Existing Options, and the Stock Option Agreements
contain the entire agreement between the parties with
respect to the subject matter hereof and supersede
all prior agreements, written or oral, with respect
thereto, including, without limitation, the Prior
Employment Agreement.
7.3 WAIVERS AND AGREEMENTS. This Agreement may be
amended, modified, superseded, cancelled, renewed or
extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right, power
or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the
exercise of any other right power or privilege
hereunder.
7.4 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be
performed entirely within such State.
7.5 ASSIGNMENT. Executive may not delegate the
performance of any of his duties hereunder. Neither
party hereto may assign any rights hereunder without
the written consent of the other party hereto.
Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
assigns.
7.6 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an
original but both of which together shall constitute
one and the same instrument.
7.7 HEADINGS. The headings in this Agreement are for
reference purposes only and shall not in any way
affect the meaning or interpretation of this
Agreement.
8. ARBITRATION.
Any and all disputes arising out of or relating to this Agreement or
the breach, termination or validity thereof shall be settled by arbitration
before a sole arbitrator in accordance with the then current CPR Rules for
Non-Administered Arbitration. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Section 116, and judgment upon the award rendered by
the arbitrator may be entered by any court having
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jurisdiction thereof. The arbitration shall be held in Dallas, Texas and,
unless the parties agree otherwise, the arbitrator shall be selected from
CPR's panel of neutrals.
Either party may demand arbitration by sending to the other party by
certified mail a written notice of demand for arbitration, setting forth the
matters to be arbitrated. The arbitrator shall have the authority to award only
compensatory damages, and neither party shall be entitled to written or
deposition discovery from the other. The Company will pay the fees and expenses
of the arbitrator, as well as any attorneys' fees, expert witness fees, and
other expenses to the extent provided in Section 18 hereof. The arbitrator shall
have no authority to alter, amend or modify any of the terms and conditions of
this Agreement.
Before arbitrating the dispute, the parties, if they so agree, may
endeavor to settle the dispute by mediation under the then current CPR Mediation
Procedure. Unless otherwise agreed, the parties will select a mediator from the
CPR panel of neutrals. If the mediation is not successfully concluded within
thirty (30) days, the dispute will proceed to arbitration as set forth above.
Notwithstanding the pendency of any dispute or controversy concerning
termination or the effects thereof, the Company will continue to pay the
Executive his full compensation in effect immediately before any notice of
termination giving rise to the dispute was given and continue him as a
participant in all compensation, benefit and insurance plans in which he was
then participating, until an award has been entered by the arbitrator. Any
amounts paid hereunder shall be set off against or reduced by any other amounts
due under this Agreement.
9. STOCK OPTIONS, REGISTRATION.
(a) The Company agrees, upon the occurrence of a Filing
Event (as defined below), as promptly as practicable but
not later than 45 days after such occurrence, to (i) file
with the Securities and Exchange Commission (the "SEC"), at
the Company's cost and expense, a Registration Statement on
Form S-8, including an offer prospectus on Form S-3 (or
similar form) with respect to the shares of Common Stock
issuable upon exercise of the Options, the Existing
Options, and (to the extent not previously exercised) the
Right (as defined in the Stock Appreciation Rights
Agreement dated as of February 20, 1998, between the
Company and Executive (the "SAR Agreement")), (ii) maintain
the effectiveness of such Registration Statement (subject
to the other provisions of this Section 9) until all of the
Options, the Existing Options and the Right shall have been
exercised in full or shall have expired, whichever shall
first occur, and (iii) provide to Executive copies of the
Registration Statement and all amendments, if any, thereto.
The Company further agrees to cause any Registration
Statement on Form S-8 filed by the Company on behalf of its
other employees to cover the Options, the Existing Options
and the Right held by the Executive.
(b) (i) If the Company proposes to effect an underwritten
secondary registration on behalf of DTI Investors LLC or
its members, the Company will provide prompt notice to the
Executive thereof and will permit the Executive to include
in such registration shares of Common Stock owned by him
(including shares acquired or to be acquired pursuant to
the exercise of options by him) with respect to which the
Company has received written request for inclusion therein
within 20 days after the receipt of the Company's notice.
Common Stock requested by the Executive to be included in
such registration will be included pro rata on the basis of
the number of shares of Common Stock held by the Executive
and the other
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participants in such registration, subject to reduction,
if necessary, if the managing underwriter for the offering
advises the Company that such reduction is advisable in
order to avoid an adverse effect on the proposed offering;
provided, however, Executive shall have priority as to
500,000 of his shares of Common Stock.
(ii) Subject to receipt of requisite third
party consents, at any time during the period commencing
January 31, 2005 and ending December 31, 2006, Executive
shall have the right to make one or more requests for
registration on Form S-3 of shares of Common Stock owned by
him (including shares acquired pursuant to the exercise of
options by him), provided that such request shall not be
effective unless the Common Stock subject thereto has an
estimated market value of at least $15,000,000. The Company
will not be obligated to effect any such registration
within six months after the effective date of any
previously filed registration statement of the Company, and
the Company shall have the right to postpone any requested
registration for up to six months if it determines in good
faith that such registration could reasonably be expected
to have an adverse effect on any Proposal or plan by the
Company or its subsidiaries to engage in any acquisition,
merger, disposition or other material corporate
transaction. Executive shall have the right to select the
managing underwriters to administer the registered public
offering requested pursuant hereto, who shall be of
national prominence and reasonably acceptable to the
Company. Upon any request pursuant hereto, the Company will
use all reasonable efforts to effect the registration and
the sale of the Common Stock subject thereto as promptly as
practicable. Executive acknowledges that any registration
requested pursuant hereto will be subject to any "piggy
back" registration rights in effect at the time of the
Executive's request, provided, however, that (a) the
Executive shall not be obligated to reduce his
participation in such registration below 2 million shares
of Common stock as a result of a pro-rata reduction, and
(b) the Executive shall have the right to make one or more
additional requests for registration (on the same terms and
conditions provided for in this subparagraph (ii), except
that the $15 million minimum referred to above shall be $10
million) if shares of Common Stock owned by him were
excluded from registration as a result of "piggy back"
registration rights of others exercised by others. Except
as otherwise set forth above, no such "piggy back"
registration rights shall have priority over those granted
to the Executive pursuant to this subparagraph (ii).
(iii) The Company shall bear all expenses in
connection with the registrations provided for herein
(other than underwriting discounts and commissions and
transfer taxes, if any) and fees and expenses of the
Executive's legal and other advisers, attributable to the
inclusion in any such registration of Common Stock owned by
Executive.
(c) The obligations of the Company contained in this
Section 9 are subject to (i) requirements of applicable
law, (ii) restrictions that may be imposed by the Company's
underwriters, and (iii) Executive cooperating and providing
any needed consents, agreements (including any required
"lock up" or customary indemnity agreements, to the extent
such arrangements are requested of members of Company
management or significant shareholders, generally) and
information. Executive agrees that he will discontinue any
(i) exercise of the Options, the Existing Options, or the
Rights or (ii) sale of shares of Common Stock upon notice
from the Company that an event or development makes
amendment or supplement of any Registration Statement of
the Company covering shares of Common Stock owned by the
Executive (or suspension of effectiveness thereof)
necessary, and will not resume such exercise
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or sale until the Company informs Executive he may do so
(provided that the Company shall not require such
discontinuance for more than 90 days in any 360-day
period). Executive specifically agrees that, in
connection with a Filing Event described in clause (i)
of the definition thereof, he will not sell, transfer or
otherwise dispose of any shares of Common Stock, for a
period of 180 days following such event, unless the
underwriters for the relevant public offering determine
a shorter period to be appropriate.
(d) For the purpose of this Section 9, "Filing Event" shall
mean the earliest to occur of the following events: (i) the
sale in a registered public offering of at least 10% of the
shares of Common Stock held at such time by DTI Investors
LLC or its members (taken as a group); and (ii) the date of
the termination of the Executive's employment (A) by the
Company without Cause or by reason of disability or by the
Executive for Good Reason, (B) as a result of the
expiration of the Term of this Agreement (December 31,
2004), (C) by reason of the Executive's death, or (D)
subsequent to a Change of Control (as such term is defined
in the Change of Control Agreement).
(e) Company agrees, at the reasonable request of Executive
and at the sole cost of Company, to assist Executive in
determining a strategy for the sale of Common Stock
acquired by Executive, whether acquired pursuant to the
Options, the Existing Options, the Rights or otherwise,
provided that such strategy shall be designed to maximize
the economic and business benefits for both Company and
Executive.
(f) Company agrees that the Options granted pursuant to
Section 3.3 of this Agreement, as well as any stock options
granted to him in the future by the Company, shall (to the
extent permitted by law) be transferable by Executive
without restriction, provided that Executive shall be
required to notify Company (and inform Company of the terms
of such transfer and the identity of the transferee of such
options) at least five (5) business days prior to such
transfer.
(g) Company and Executive agree that this Agreement hereby
incorporates the terms of that certain letter, dated August
5, 1999, from the Company to DTI Investors LLC (the "Letter
Agreement"), which Letter Agreement has been previously
provided to Executive. To the extent that the terms and
provisions of the Letter Agreement and this Agreement are
inconsistent, the terms and provisions of the Letter
Agreement shall prevail.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
DAL-TILE INTERNATIONAL INC.
-------------------------- By:
XXXXXXX X. XXXXXX ---------------------------------
Name:
-------------------------------
Title:
------------------------------
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