EXHIBIT 10.14
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of December 14,
2000, by and between Dal-Tile International Inc., a Delaware corporation (the
"Company"), and W. Christopher Wellborn (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.
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 acknowledged, the parties hereby agree as
follows:
1. TERM OF EMPLOYMENT. The term of the Executive's employment
under this Agreement (the "Term") shall commence on August 25, 1997 and
continue through and expire on December 31, 2004 unless earlier terminated as
herein provided. The Term of this Agreement shall automatically be renewed
for successive one-year periods unless Company shall have given Executive
notice of non-renewal at least six months prior to December 31, 2004 (or such
subsequent December 31st to which the Term has been extended).
2. DUTIES OF EMPLOYMENT. The Executive hereby agrees for the Term
to render his exclusive services to the Company as its Chief Financial
Officer and, in connection therewith, to perform such duties commensurate
with his office as he shall reasonably be directed by the Chief Executive
Officer of the Company (the "CEO") 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 of Directors of the Company (the "Board"), the Executive shall, for no
additional compensation, 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.
3. COMPENSATION AND OTHER BENEFITS.
3.1 SALARY. 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 rate of $360,000 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. The Executive shall be
eligible to receive annual salary reviews and salary increases as authorized
by the Board.
3.2 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. The amount of the Annual Bonus shall range from (i) no payment if
performance goals are not attained as established under the Plan as determined
by the Compensation Committee of the Board and the Board, (ii) a maximum of 50%
of the amount of the Annual Salary upon attainment of the "target" performance
goal established under the Plan and (iii) a maximum of 100% of the amount of the
Annual Salary upon attainment of the "maximum" performance goal established
under the Plan. The Annual
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Bonus may be paid on a pro rata basis upon attainment of performance goals as
determined by the Compensation Committee of the Board.
3.3 STOCK OPTION AGREEMENT. Concurrent with the execution of
this Agreement, the Company shall subject to approval by its shareholders of
the Dal-Tile International, Inc. 1998 Amended and Restated Stock Option Plan in
accordance with Section 162(m) of the Code (the "Option Plan"), grant options
(the "Options") to purchase 120,000 shares of its Common Stock at an exercise
price per share equal to the fair market value of the Common Stock on the date
hereof on the terms and conditions set forth in the Option Plan and a Stock
Option Agreement to be entered into (the "Stock Option Agreement") in the form
attached hereto as Exhibit B. If Executive's employment with the Company is
terminated by the Company without Cause (as defined herein) or upon the
occurrence of a Transaction (as defined in the Stock Option Plan), the Options
shall be 100% vested and shall remain exercisable through the term of the Stock
Option Agreement.
3.4 TREATMENT OF PREVIOUSLY-GRANTED STOCK OPTIONS.
3.4.1 IN GENERAL. Except as otherwise provided for herein, 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."
3.4.2 DECEMBER 10, 1998 STOCK OPTION. Section 4 of the Nonqualified
Stock Option Agreement dated December 10, 1998 between Executive and Company is
hereby amended by deleting the third sentence thereof and replacing such
sentence with the following language:
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"Notwithstanding any provision of this Option to the contrary, if
Optionee remains employed by Company through December 31, 2001, the Option shall
be 100% vested and shall remain exercisable until December 10, 2008."
3.4.3 JULY 17, 1998 STOCK OPTION. Section 4 of the Nonqualified Stock
Option Agreement dated July 17, 1998 between Executive and Company is hereby
amended by deleting the third sentence thereof and replacing such sentence with
the following language:
"Notwithstanding any provision of this Option to the contrary,
if Optionee remains employed by Company through December 31, 2001, the Option
shall be 100% vested and shall remain exercisable through July 17, 2008."
3.4.4 February 20, 1998 Stock Option. Section 4 of the Amended and
Restated Nonqualified Stock Option Agreement dated as of February 20, 1998
between Executive and Company is hereby amended by deleting the third sentence
thereof and replacing such sentence with the following language:
"Notwithstanding any provision of this Option to the contrary, if
Optionee remains employed by Company through August 25, 2000, the Option shall
be 100% vested and shall remain exercisable through August 25, 2007."
3.5 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. Commencing on the
respective eligibility dates of the 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.
3.6 VACATION. The Executive shall be entitled to three (3) weeks
vacation per annum.
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4. COVENANTS AGAINST COMPETITION. In order to induce the Company to
enter this Agreement and the Stock Option 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 of glazed and unglazed tile, for which marketing
and distribution is a primary business (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, affairs, 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
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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 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. 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 means, made or controlled 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, or any efforts by the Executive
to interfere with the Companies' relationship with any other employee, 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
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terminate employment with the Companies; (ii) interfere with or 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 a 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 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
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of the Restrictive Covenants would cause irreparable injury to the Company
and money damages will not provide an adequate remedy to the Company.
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 county 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
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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 such bonus period to the date of
Executive's death (to be paid 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
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such 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 benefit 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 base 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 and
include (i) the conviction of or plea of guilty by the Executive of any felony
or other serious crime involving the Company, or (ii) gross 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
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failure 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 with 15 days of the
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 3.3, 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, and (iv) in a lump sum payment (to be paid as promptly as
practicable, but no later than 10 days after
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the determination thereof; it being understood that the Executive shall make
the determination whether the bonus payment shall be made immediately after
the effective date of the termination or after the end of the fiscal year of
the termination) a portion of any other bonus plan(s) in which the Executive
is a participant computed and determined in accordance with its terms, on a
pro-rated basis based on the performance of the Company from the beginning of
the bonus period through the date of termination. For purposes of this
Agreement, "Good Reason" shall mean (i) a reduction in the Annual Salary or
maximum 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, or (v)
assignment to Executive of duties and responsibilities that are inconsistent
with his position in any material respect. Notwithstanding the foregoing
provisions of this Section 5.4, in no event shall Annual Salary be provided
for less than one (1) year from the date of such termination.
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
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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 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 NON-RENEWAL OF EMPLOYMENT AGREEMENT. If the Company shall
not renew this Agreement at the end of the Term, the Company's sole obligation
hereunder shall be to (i) pay to the Executive an amount equal to any Annual
Salary accrued and due and payable to the Executive hereunder through the last
date of the Term of this Agreement, as set forth in Section 1 hereof (to be paid
in accordance with the Company's usual payroll practices for executives), (ii)
thereafter, pay to the Executive an amount equal to the Annual Salary (as set
forth in Section 3.1) payable for one year to be paid in accordance with the
Company's usual payroll practices for executives and (iii) provide to the
Executive for a period of one year commencing on the day after the last date of
the Term of this Agreement 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. As of the last date of the Term of this Agreement,
accrual of vacation time shall be discontinued. Upon acceptance by Executive of
an employment opportunity other than the Company, payments by the Company
pursuant to clauses (ii) and (iii) of this Section 5.6 shall terminate.
5.7 OTHER. Except as otherwise provided herein, upon the
expiration or other termination of this Agreement, including the resignation of
Executive, all obligations of the
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Company shall forthwith terminate, except as to any stock option rights as
provided in the Stock Option Agreement and the Existing Options and except as
otherwise required by applicable law.
6. EXPENSES.
6.1 GENERAL. During the Term, the Executive will be reimbursed
for his reasonable expenses incurred for the benefits 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. With respect to any expenses which
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. 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.
7834 Hawn Freeway
Dallas, Texas 75217
Attention: Mark A. Solls
(ii) if to the Executive, to:
W. Christopher Wellborn
908 Suffolk Court
Southlake, Texas 76092
Any party may change its address for notice hereunder by notice to the other
parties hereto.
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7.2 ENTIRE AGREEMENT. This Agreement, the Stock Option Agreement,
the Existing Options, and the Change of Control Agreement 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.
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
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 by 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.
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.
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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 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.
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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. PIGGYBACK RIGHTS.
(a) 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 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 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. The Company shall bear all expenses in connection with such
registration, 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 such registration of Common Stock
owned by Executive.
(b) 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
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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 exercise of Options or 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 (or suspension of effectiveness thereof) necessary, and will not
resume such exercise 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
DAL-TILE INTERNATIONAL INC.
By:
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Name:
--------------------------
Title:
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--------------------------------
W. Christopher Wellborn
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