EXHIBIT 10.16
CHANGE OF CONTROL AGREEMENT
1. RECITALS
(a) This Change of Control Agreement ("Agreement") is between Dal-Tile
International Inc. (the "Company") and W. Christopher Wellborn (the "Executive")
and is effective as of October 1, 2000.
(b) The address of the Company is 7834 C.F. Hawn Freeway, PO Box
170130, Dallas, Texas 75217. The address of the Executive is 908 Suffolk Court,
Southlake, Texas 76092.
(c) The Executive is currently employed by the Company in the capacity
of Executive Vice President and Chief Financial Officer and the Executive is one
of the key executives of the Company.
(d) In consideration of the mutual promises contained herein and other
good and valuable consideration, the Executive and the Company have entered into
this Agreement.
(e) This Agreement is in addition to, and supplements the provisions
of, the Employment Agreement dated as of August 25, 1997, amended as of October
10, 1997, and further amended by the First Amendment to Employment Agreement
dated as of November 24, 1998, between the Company and the Executive (the
"Employment Agreement").
2. TERM OF THIS AGREEMENT
This Agreement shall remain in effect until December 31, 2005 (the
"Agreement Termination Date"), provided that on January 1, 2004 (and each
January 1st thereafter), the Agreement Termination Date shall be extended by one
year, unless the Company shall have notified the Executive at least six months
prior to such January 1st that the Agreement Termination Date shall not be
extended.
3. CHANGE OF CONTROL
Notwithstanding the other provisions of this Agreement, no benefit
shall be payable under this Agreement (and Sections 5 through 9, and Section 16,
shall not apply) unless (i) a Change of Control of the Company shall be deemed
to have occurred, (ii) the Executive shall be employed by the Company at the
time of such Change of Control (except to the extent Section 3(g) is
applicable), and (iii) the Executive's employment by the Company shall have been
terminated by the Executive more than one hundred eighty (180) days after such
Change of Control (but within one year after the date of such Change of
Control), or by the Company for any reason within two (2) years after such
Change of Control. For purposes of this Agreement, a "Change of Control of the
Company" shall be deemed to have occurred if:
(a) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and immediately after such merger,
consolidation or reorganization less than fifty percent (50%) of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
voting stock of the Company immediately prior to such transaction;
(b) The Company sells all or substantially all of its assets to any
other corporation or other legal person, and less than fifty percent (50%) of
the combined voting power of the then-outstanding securities of such corporation
or person immediately after such sale are held in the aggregate by the holders
of voting stock of the Company immediately prior to such sale;
(c) Any person or group of persons (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than DTI
Investors LLC or its members, or any affiliate or successor of DTI Investors LLC
or its members, becomes the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities (i) representing 40% or more of the issued and
outstanding common stock of the Company or (ii) possessing the power to elect a
majority of the Board of Directors of the Company, provided that a Change of
Control under this Section 3(c) shall only be deemed to occur if such person or
persons shall own at such time a greater number of shares of common stock than
are owned at such time by DTI Investors LLC, or its members, or its former
members (taken as a group);
(d) The Company files a report or proxy statement with the Securities
and
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Exchange Commission pursuant to the Exchange Act disclosing in response to
Form 8-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a Change of Control of the Company has occurred;
(e) The shareholders of the Company approve the liquidation or
dissolution of the Company;
(f) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board of Directors of the
Company (the "Board") cease for any reason to constitute at least a majority
thereof, provided, however, that for purposes of this Section 3(f), each
Director who is first elected, or first nominated for election by the Company's
stockholders, by a vote of at least two thirds of the Directors of the Company
(or a committee thereof) then still in office who were Directors of the Company
at the beginning of any such period will be deemed to have been a Director of
the Company at the beginning of such period; or
(g) At the time of determination, the Company is actively engaged in
negotiations or other activities for the purpose of effecting a transaction of
the type referred to in Section 3(a), (b), (c), or (e) of this Agreement and,
in the case of this Section 3(g) only, the Executive's employment is terminated
by the Company.
3. NOTICE OF TERMINATION; DATE OF TERMINATION
(a) Any termination of the Executive's employment by the Company or the
Executive shall be communicated by written Notice of Termination to the other
party thereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provision so indicated.
(b) "Date of Termination" shall mean:
(i) If the Agreement is terminated for Disability,
thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have
returned to the performance of his duties on a
full-time basis during such thirty (30) day
period), or
(ii) If the Executive's employment is terminated for
any other reason, the date on which a Notice of
Termination is given.
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4. COMPENSATION AFTER CHANGE OF CONTROL
Immediately after any Change of Control of the Company shall be deemed
to have occurred, the Executive shall be entitled to receive for the remainder
of the Term of this Agreement (as extended from time to time) (i) an annual base
salary (the "Base Salary"), payable in installments in accordance with the
current practice of the Company, at an annual rate at least equal to the
aggregate annual base salary payable to the Executive as of the date of the
Change of Control of the Company and (ii) an award under a Company incentive
bonus plan offering the Executive the opportunity to earn a target bonus at
least comparable to the target bonus opportunity offered under the Company's
Annual Incentive Plan immediately prior to the Change of Control. Subsequent to
such Change of Control, the Base Salary may be increased (but may not be
decreased) at any time and from time to time by action of the Board, any
committee thereof, or any individual having authority to take such action, in
accordance with the Company's regular practices, and, if so increased, such
increased Base Salary shall thereafter be the Base Salary for the purposes of
this Agreement. Any increase in the Base Salary shall not serve to limit or
reduce any other obligation of the Company hereunder.
5. BENEFIT PLANS
After a Change of Control of the Company shall be deemed to have
occurred,
(a) The Company agrees to continue in effect those perquisites, and
benefit or compensation plans, identified on Exhibit A hereto in which the
Executive is currently participating or, with continued service or retirement
would be eligible for participation (collectively referred to as the "Benefit
Plans"); or to maintain plans providing substantially similar benefits;
provided, however, that the Company may make modifications in such plans so long
as such modifications (i) are generally applicable to all salaried employees of
the Company and (ii) do not discriminate against highly-paid employees of the
Company;
(b) Except as permitted in the proviso contained in paragraph (a)
above, the Company agrees not to take any action that would adversely affect the
Executive's participation in, or materially reduce the benefits under, any of
the Benefit Plans or deprive the Executive of any material fringe benefit
currently enjoyed;
(c) The Company agrees to provide the Executive with the number of paid
vacation days to which he is entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in effect on the
date of the Change of Control of the Company or in accordance with the
Executive's individual employment agreement; and
(d) Except as provided in Section 19 hereof, benefits herein provided
are in
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lieu of any severance payment benefit otherwise provided under any other
Agreement, policy or practice provided by the Company except that Executive
shall retain any rights that he has with respect to accumulated and unused
vacation or vacation pay. The Executive waives all rights to any other
severance payments under any such agreement, policy or practice provided,
however, that this waiver shall not extend to any retirement plan, excess
benefit plan, applicable supplemental pension plan, or Executive's rights
under the Employment Agreement.
7. TERMINATION FOR DEATH OR DISABILITY
(a) The Executive's employment shall terminate in the event of
Executive's death.
(b) The Company may terminate Executive's employment for "Disability"
if the Executive is "Disabled." For purposes of this Agreement, the Executive
shall be considered Disabled only if, as a result of his incapacity due to
physical or mental illness, he shall have been absent from his duties with the
Company on a full-time basis for a period of one year and a physician selected
by him is of the opinion that (i) he is suffering from "Total Disability" as
defined in the Company's qualified pension plan as of the date hereof, or any
successor plan or program and (ii) he will qualify for Social Security
Disability Payment and (iii) within thirty (30) days after written notice of
termination is given, he shall not have returned to the full-time performance of
his duties.
(c) If, subsequent to a Change of Control, the Executive's employment
terminates on account of the Executive's death or because the Executive is
Disabled, the Company shall pay to the Executive (or his successors) the
amounts, and provide to the Executive the benefits, set forth in Section 8
hereof.
8. COMPENSATION UPON CERTAIN TERMINATIONS
(a) If, subsequent to a Change of Control, (i) the Company shall
terminate the Executive's employment within two (2) years after such Change of
Control or (ii) the Executive shall terminate his employment more than one
hundred eighty (180) days after such Change of Control (but within one year
after such Change of Control), then the Company shall pay to the Executive in a
lump sum on the fifteenth business day following the Date of Termination, the
following amounts:
(i) The Executive's Base Salary through the Date of
Termination at the rate in effect at the time
Notice of Termination is given;
(ii) A pro-rata portion of the Executive's target bonus
for the year
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in which the Date of Termination occurs, based
upon the number of days that have elapsed during
the year in question prior to the Date of
Termination.
(iii) In lieu of any further salary and bonus payments
for periods subsequent to the Date of Termination,
an amount equal to 3 multiplied by the sum of (i)
the Executive's current Base Salary at such time
and (ii) the greater of (I) the average of the
bonuses actually received by the Executive with
respect to the two calendar years immediately
preceding the year in which the Date of
Termination occurs or (II) the Executive's target
bonus for the year in which the Date of
Termination occurs.
(iv) All legal fees and expenses incurred as a result
of such termination (including all such fees and
expenses, if any, incurred in contesting or
disputing any such termination, in seeking to
obtain or enforce any right or benefit provided by
this Agreement, or in interpreting this
Agreement).
(b) If, subsequent to a Change of Control, (i) the Company shall
terminate the Executive's employment within two (2) years after such Change of
Control or (ii) the Executive shall terminate his employment more than one
hundred eighty (180) days after such Change of Control (but within one year
after such Change of Control), the Company shall maintain in full force and
effect, for the Executive's continued benefit for thirty-six (36) months after
the Date of Termination, all medical and dental employee benefit plans,
programs, or arrangements in which he was entitled to participate immediately
prior to the Date of Termination, provided that continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that participation in any such plan or program is barred, the Company
shall arrange to provide him with benefits substantially similar in coverage and
cost to those which he is entitled to receive under such plans and programs.
(c) If, subsequent to a Change of Control, (i) the Company shall
terminate the Executive's employment within two (2) years after such Change of
Control or (ii) the Executive shall terminate his employment more than one
hundred eighty (180) days after such Change of Control (but within one year
after such Change of Control), the Company shall allow the Executive, at Company
expense, to utilize the services of the public accounting firm used by the
Company to audit its books and records (or such other firm as shall be
designated by the Company) for assistance in preparation of his tax returns
relating to the taxable year in which the Executive's employment was terminated
(and for any other taxable year that is affected by the Change of Control).
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9. TREATMENT OF STOCK OPTIONS
Notwithstanding any provision to the contrary in any stock option plan
or any agreement relating to the Executive that provides for less favorable
treatment of any stock option or stock appreciation right, in the event of the
consummation of a Change of Control of the Company (excluding for this purpose
the application of Section 3(g) hereof), all stock options and stock
appreciation rights granted prior to the Change of Control by the Company to the
Executive with respect to the stock of the Company shall immediately vest and
become immediately exercisable, and shall remain exercisable for the original
maximum period set forth in such stock option or stock appreciation right
agreement.
10. SUCCESSORS, BINDING AGREEMENT
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as
would apply if the Executive terminated his employment pursuant to Section 8
hereof, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that executes and delivers the agreement provided for in this section
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law. This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee, or other designee or, if there be no such designee, to his estate.
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11. NOTICE
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by facsimile, overnight delivery service, or United States registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that all
notices to the Company shall be directed to the attention of the Secretary of
the Company, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
12. MISCELLANEOUS
No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party that are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas.
13. VALIDITY
The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
14. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
15. ALTERNATIVE DISPUTE RESOLUTION
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
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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.
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.
16. CERTAIN TAX MATTERS
(a) ADDITIONAL PAYMENTS
(i) Anything in this Agreement to the contrary
notwithstanding (other than as provided in Section
16(b) hereof), in the event it shall be determined
(as hereafter provided) that any payment or
distribution to or for the Executive's benefit,
whether paid or payable or distributed or
distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or
arrangement (including without limitation any
stock option agreement), or similar right (a
"Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue
Code of 1986 (the "Code") (or any successor
provision thereto), or any interest or penalties
with respect to such excise tax (such excise tax,
together with any such interest and penalties, are
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hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to
receive an additional payment or payments (a
"Gross-Up Payment") in an amount such that, after
payment by the Executive of all taxes (including
any interest or penalties imposed with respect to
such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of Section 16(a)(v), all
determinations required to be made under this
Section 16(a), including whether an Excise Tax is
payable by the Executive, the amount of such
Excise Tax, whether a Gross-Up Payment is
required, and the amount of such Gross-Up Payment,
shall be made by a nationally-recognized legal or
accounting firm (the "Firm") selected by the
Company in the Company's sole discretion. The
Executive agrees to direct the Firm to submit its
determination and detailed supporting calculations
to both the Executive and the Company as promptly
as practicable. If the Firm determines that any
Excise Tax is payable by the Executive and that a
Gross-Up Payment is required, the Company shall
pay the Executive the required Gross-Up Payment
within fifteen business days after receipt of such
determination and calculations. If the Firm
determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes
such determination, furnish the Executive with an
opinion that the Executive has substantial
authority not to report any Excise Tax on the
Executive's federal income tax return. Any
determination by the Firm as to the amount of the
Gross-Up Payment shall be binding upon the
Executive and the Company. As a result of the
uncertainty in the application of Section 4999 of
the Code (or any successor provision thereto) at
the time of the initial determination by the Firm
hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company
should have been made (an "Underpayment"). In the
event that the Company exhausts its remedies
pursuant to Section 16(a)(v) hereof and the
Executive thereafter is required to make a payment
of any Excise Tax, the Executive may direct the
Firm to determine the amount of the Underpayment
(if any) that has occurred and to submit its
determination and detailed supporting calculations
to both the Executive and the Company as promptly
as possible. Any such Underpayment shall be
promptly paid by the Company to the Executive, or
for the Executive's benefit, within ten
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business days after receipt of such determination
and calculations.
(iii) The Executive and the Company shall each provide
the Firm access to and copies of any books,
records and documents in the possession of the
Company or the Executive, as the case may be,
reasonably requested by the Firm, and otherwise
cooperate with the Firm in connection with the
preparation and issuance of the determination
contemplated by Section 16(a)(ii) hereof.
(iv) The fees and expenses of the Firm for its services
in connection with the determinations and
calculations contemplated by Section 16(a)(ii)
hereof shall be borne by the Company. If such fees
and expenses are initially paid by the Executive,
the Company shall reimburse the Executive the full
amount of such fees and expenses within ten
business days after receipt from the Executive of
a statement therefor and reasonable evidence of
the Executive's payment thereof.
(v) The Executive agrees to notify the Company in
writing of any claim by the Internal Revenue
Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as
practicable but no later than 10 business days
after the Executive actually receives notice of
such claim. The Executive agrees to further
apprise the Company of the nature of such claim
and the date on which such claim is requested to
be paid (in each case, to the extent known by the
Executive). The Executive agrees not to pay such
claim prior to the earlier of (a) the expiration
of the 30-calendar-day period following the date
on which the Executive gives such notice to the
Company and (b) the date that any payment with
respect to such claim is due. If the Company
notifies the Executive in writing at least five
business days prior to the expiration of such
period that it desires to contest such claim, the
Executive agrees to:
(a) provide the Company with any written records
or documents in the Executive's possession
relating to such claim reasonably requested
by the Company;
(b) take such action in connection with
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contesting such claim as the Company shall
reasonably request in writing from time to
time, including without limitation accepting
legal representation with respect to such
claim by an attorney competent in respect of
the subject matter and reasonably selected
by the Company;
(c) cooperate with the Company in good faith
in order effectively to contest such
claim; and
(d) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax
basis, from and against any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed
as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this
Section 16(a)(v), the Company shall control all proceedings
taken in connection with the contest of any claim contemplated
by this Section 16(a)(v) and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect
of such claim (provided, however, that the Executive may
participate therein at the Executive's own cost and expense)
and may, at its option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay the
tax claimed and sue for a refund, the Company shall advance
the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further,
however, that any extension of the statute of limitations
relating to payment of taxes for the Executive's taxable year
with respect to which the contested amount is claimed to be
due is limited solely to such contested amount. Furthermore,
the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment
would be payable
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hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(vi) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section
16(a)(v) hereof, the Executive receives any refund
with respect to such claim, the Executive agrees
(subject to the Company's complying with the
requirements of Section 16(a)(v) hereof) to
promptly pay to the Company the amount of such
refund (together with any interest paid or
credited thereon after any taxes applicable
thereto). If, after the Executive's receipt of an
amount advanced by the Company pursuant to Section
16(a)(v) hereof, a determination is made that the
Executive is not entitled to any refund with
respect to such claim and the Company does not
notify the Executive in writing of its intent to
contest such denial of refund prior to the
expiration of 30 calendar days after such
determination, then such advance shall be forgiven
and shall not be required to be repaid and the
amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required
to be paid pursuant to this Section 16(a).
(b) Notwithstanding Section 16(a), in the event that the excess of
(i) the amount of "parachute payments" (as defined in Section
280G of the Code) received by the Executive pursuant to this
Agreement (or any other agreement between the Company and the
Executive) over (ii) 2.99 times the Executive's "base amount"
(as defined in Section 280G of the Code), is less than
$50,000, the Executive agrees to waive such payments and
benefits as he may choose so as to reduce the payments and
benefits that he shall receive to an amount that will not
result in any loss of a deduction to the Company for such
payments and benefits pursuant to Section 280G nor the
imposition of an excise tax on the Executive for such payments
and benefits pursuant to Section 4999.
17. WITHHOLDING OF TAXES
The Company may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or government regulation or ruling.
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18. LEGAL FEES AND EXPENSES
It is the intent of the Company that the Executive not be required to
incur the legal expenses associated with (i) the obtaining of any right or
benefit under, this Agreement or (ii) the enforcement of his rights under this
Agreement by litigation or other legal action, because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to represent the Executive in connection with
the interpretation or enforcement of this Agreement, including the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any Director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The Company shall pay or cause to be paid and shall
be solely responsible for any and all attorneys' and related fees and expenses
incurred by the Executive under this Section 18.
19. INTEGRATION WITH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
The Company has previously entered into the Employment Agreement with
Executive. It is the intent of both Company and Executive that such Employment
Agreement remain in full force and effect and that this Agreement in no way
shall impair Executive's rights and obligations, and Company's rights and
obligations, under such Employment Agreement. However, to the extent that this
Agreement and the Employment 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
Employment 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.
Dal-Tile International Inc.
BY:
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Title:
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W. Christopher Wellborn
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