EXHIBIT 4.4
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxxxxxxxxxx Xxxxxxxx, 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
00000 (the "Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 300,000 shares of the common stock, par value $.01
per share (the "Common Stock") of Dal-Tile (the "Shares") on the terms and
conditions set forth in this Agreement. The base price for each Share
covered by this Right shall be $9.01 as adjusted pursuant to this Agreement
(the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise, over the Base Price by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $11.94 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2 shall,
in the sole discretion of the Committee, be made: (i) in cash; (ii) by
delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a Loan in the event
the Grantee's employment by Dal-Tile has been terminated by Dal-Tile with
Cause (as defined in the Employment Agreement) or by the Grantee.
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on August
25, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to Dal-Tile
promptly, as repayment of the outstanding principal amount and accrued
interest of the Loans, the after-tax proceeds received by the Grantee from
any disposition of Common Stock, or options to acquire Common Stock, held
from time to time by the Grantee, and (b) the outstanding principal amount
and accrued interest of all the Loans shall be immediately payable in the
event the Grantee's employment by Dal-Tile is terminated by Dal-Tile with
"Cause" (as defined in the Employment Agreement) or by the Grantee.
Repayments shall be applied first to the Loan which was most recently made.
Each Loan shall be secured by any and all shares of Common Stock and
options to acquire Common Stock held by the Grantee and by the Right.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative percentage of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date.................................... 25%
On August 25, 1998................................... 50%
On August 25, 1999................................... 75%
On August 25, 2000................................... 100%
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason,
subject to Section 6.3 hereof.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative number of
Shares in which the Grantee may then be, or thereafter become, vested, only
if Dal-Tile reports, pursuant to its audited financial statements, positive
net income ("Net Income") for either its fiscal year ending December 31,
1998 or its fiscal year ending December 31, 1999 (the "Performance
Target"). The Right shall not be exercisable prior to the vesting thereof
and the time the Committee certifies that the Performance Target has been
satisfied. The Committee shall act within seven days with respect to
certification following the availability of the relevant audited financial
statements. For purposes of this Agreement, Net Income shall be calculated
without taking into account any charge against income which may arise as a
result of the Right granted pursuant to this Agreement or any other stock
appreciation right which may, from time to time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on August 25, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile; PROVIDED, HOWEVER, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 6.1 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) in the event of a "Transaction" that does not also constitute
a "Non-Control Transaction" (each, as defined in the Stock Option Plan),
the Right shall, unless the Grantee and Dal-Tile shall otherwise agree,
automatically be converted into the right to receive, with respect to each
Share subject to the Right, at the consummation of such Transaction, a
payment of the same amount and kind of stock, securities, cash, property or
other consideration that each holder of a Share was entitled to receive in
such Transaction in respect of a Share, less the Base Price; PROVIDED,
HOWEVER, that the fair market value of such stock, securities, cash,
property or other consideration shall not exceed the Ceiling Price less the
Base Price. If more than one (1) form of consideration is included in such
Transaction, the various components thereof shall be appropriately
prorated; and
(b) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
change in the Shares resulting from a merger involving the Company.
Adjustments under this Section 6.2(b) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the termination of the Grantee's employment by
Dal-Tile with "Cause" (as such term is defined in the Employment
Agreement). In the event of the termination of the Grantee's employment by
Dal-Tile without Cause, the Grantee shall be vested in 100% of the Shares
subject to the Right, which Right shall, notwithstanding such vesting,
become exercisable only in accordance with Section 3.2 hereof. In the event
of the termination of the Grantee's employment by the Grantee, the Right,
to the extent then vested, shall become exercisable only in accordance with
Section 3.2 hereof and shall terminate on the earliest to occur of: (i) the
tenth anniversary of the Grant Date; and (ii) the date which is ten (10)
days after the later of: (A) such termination of the Grantee's employment;
and (B) the date that achievement of the Performance Target is certified,
and the unvested portion of the Right shall be forfeited. In the event of
the termination of the Grantee's employment by reason of the Grantee's
death or "disability" (as such term is used under the Employment
Agreement), the Right, to the extent then vested, shall be exercisable
until August 25, 2007, and the unvested portion of the Right shall be
forfeited on the effective date of such termination.
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Employment Agreement" shall mean the Employment
Agreement, dated as of August 25, 1997, and as amended from time to time,
by and between Dal-Tile and the Grantee.
(h) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(i) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(j) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(k) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(l) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(m) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
0000 X.X. Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxxxxxxxxxx Xxxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice
to the other parties hereto.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations, in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three months of exercise of the Right, payment
of the amount determined under Section 2 hereof will be made in cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
/s/ Xxxxxxxxxxx Xxxxxxxx
--------------------------------------
Xxxxxxxxxxx Xxxxxxxx
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1997, with respect to
_____ Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act. The undersigned acknowledges that
he/she understands that the Shares are not so registered.
Please pay all cash to, and issue any certificate or certificates for
any Shares in the name of:
Name:
-----------------------------------------------------
Address:
--------------------------------------------------
Social Security or Tax I.D. Number:
-----------------------
(Please print)
Signature
-----------------------------
Dated , 199 .
----- -
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxxxxxx Xxxxxx, 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx 00000
(the "Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 250,000 shares of the common stock, par value $.01
per share (the "Common Stock"), of Dal-Tile (the "Shares") on the terms and
conditions set forth in this Agreement. The base price for each Share
covered by this Right shall be $9.01, as adjusted pursuant to this
Agreement (the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise over the Base Price; by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $13.69 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2 shall,
in the sole discretion of the Committee, be made: (i) in cash; (ii) by
delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a Loan in the event
the Grantee's employment by Dal-Tile has been terminated by Dal-Tile with
Cause (as defined in the Employment Agreement) or by the Grantee without
Good Reason (as defined in the Employment Agreement).
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on June
13, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to Dal-Tile
promptly, as repayment of the outstanding principal amount and accrued
interest of the Loans, the after-tax proceeds received by the Grantee from
any disposition of Common Stock, or options to acquire Common Stock, held
from time to time by the Grantee, and (b) the outstanding principal amount
and accrued interest of all the Loans shall be immediately payable in the
event the Grantee's employment by Dal-Tile is terminated by Dal-Tile with
"Cause" (as defined in the Employment Agreement) or by the Grantee without
Good Reason (as defined in the Employment Agreement). Repayments shall be
applied first to the Loan which was most recently made. Each Loan shall be
secured by such number of shares of Common Stock issued pursuant to the
Right that from time to time have a Fair Market Value equal to the
outstanding principal amount and accrued interest of all of the Loans.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative number of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date ................................... 62,500
On June 13, 1998 .................................... 125,000
On June 13, 1999 .................................... 187,500
On December 31, 1999................................. 250,000
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason,
subject to Section 6.3 hereof.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative number of
Shares in which the Grantee may then be, or thereafter become, vested, only
if Dal-Tile reports, pursuant to its audited financial statements, positive
net income ("Net Income") for either its fiscal year ending December 31,
1998 or its fiscal year ending December 31, 1999 (the "Performance
Target"). The Right shall not be exercisable prior to the vesting thereof
and the time the Committee certifies that the Performance Target has been
satisfied. The Committee shall act within seven days with respect to
certification following the availability of the relevant audited financial
statements. For purposes of this Agreement, Net Income shall be calculated
without taking into account any charge against income which may arise as a
result of the Right granted pursuant to this Agreement or any other stock
appreciation right which may, from time to time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on June 13, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile;
PROVIDED, HOWEVER, that any fractional Shares resulting from any
such adjustment shall be eliminated. Adjustments under this Section 6.1
shall be made by the Committee, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding, and
conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) the Grantee shall be vested in, and shall be entitled to
exercise the Right with respect to, 100% of the Shares subject to the Right
upon the occurrence of any transaction or series of related transactions as
a result of which any person or "group" of persons (as such expression is
used under the 1934 Act, and the rules thereunder) other than DTI Investors
LLC or its members or any of their affiliates or successors (collectively,
an "Acquiring Person"): (i) becomes the owner of a greater number of Shares
than are then owned by DTI Investors LLC or its members or former members
(taken as a group), provided that the Acquiring Person owns at least 40% of
the issued and outstanding Shares; or (ii) has the power to elect a
majority of the Board; and
(b) in the event of a "Transaction" that does not also constitute
a "Non-Control Transaction" (each, as defined in the Non-Qualified Stock
Option Agreement, dated as of February 20, 1998, between the Grantee and
Dal-Tile), the Right shall, unless the Grantee and Dal-Tile shall otherwise
agree, automatically be converted into the right to receive, with respect
to each Share subject to the Right, at the consummation of such
Transaction, a payment of the same amount and kind of stock, securities,
cash, property or other consideration that each holder of a Share was
entitled to receive in such Transaction in respect of a Share, less the
Base Price; PROVIDED, HOWEVER, that the fair market value of such stock,
securities, cash, property or other consideration shall not exceed the
Ceiling Price less the Base Price. If more than one (1) form of
consideration is included in such Transaction, the various components
thereof shall be appropriately prorated; and
(c) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
change in the Shares resulting from a merger involving the Company.
Adjustments under this Section 6.2(c) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the termination of the Grantee's employment by
Dal-Tile with "Cause." In the event of the termination of the Grantee's
employment by Dal-Tile without Cause or by the Grantee with "Good Reason":
(i) on or prior to June 30, 1998, the Grantee shall be vested in 50% of the
Shares subject to the Right, which Right shall, notwithstanding such
vesting, become exercisable only in accordance with Section 3.2 hereof; and
(ii) after June 30, 1998, the Grantee shall be vested in 100% of the
Shares subject to the Right, which Right shall, notwithstanding such
vesting, become exercisable only in accordance with Section 3.2 hereof. In
the event of the termination of the Grantee's employment by the Grantee
without Good Reason, the Right, to the extent then vested, shall become
exercisable only in accordance with Section 3.2 hereof and shall terminate
on the earliest to occur of: (i) the tenth anniversary of the Grant Date;
and (ii) the date which is ten (10) days after the later of: (A) such
termination of the Grantee's employment; and (B) the date that achievement
of the Performance Target is certified, and the unvested portion of the
Right shall be forfeited. In the event of the termination of the Grantee's
employment by reason of the Grantee's death or "disability" (as such term
is used under the Employment Agreement), the Right, to the extent then
vested, shall be exercisable until the tenth anniversary of the Grant Date,
and the unvested portion of the Right shall be forfeited on the effective
date of such termination.
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Employment Agreement" shall mean the Employment
Agreement, dated as of June 13, 1997, and as amended from time to time, by
and between Dal-Tile and the Grantee.
(h) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(i) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(j) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(k) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(l) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(m) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
X.X. Xxxx Freeway
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxxxxxx Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
with a copy to:
Xxx X. Xxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Aronoff, LLP
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.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three months of exercise of the Right, payment
of the amount determined under Section 2 hereof will be made in cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, General Counsel
and Secretary
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1998, with respect to
_____ Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act.
The undersigned acknowledges that he/she understands that the Shares
are not so registered.
Please pay all cash to, and issue any certificate or certificates for
any Shares in the name of:
Name:
-----------------------------------------------------
Address:
--------------------------------------------------
Social Security or Tax I.D. Number:
-----------------------
(Please print)
Signature
-----------------------------
Dated , 199 .
----- -
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxxxxxx Xxxxxx, 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx 00000
(the "Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 2,000,000 shares of the common stock, par value
$.01 per share (the "Common Stock"), of Dal-Tile (the "Shares") on the
terms and conditions set forth in this Agreement. The base price for each
Share covered by this Right shall be $9.01, as adjusted pursuant to this
Agreement (the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise over the Base Price; by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $11.94 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2 shall,
in the sole discretion of the Committee, be made: (i) in cash; (ii) by
delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a Loan in the event
the Grantee's employment by Dal-Tile has been terminated by Dal-Tile with
Cause (as defined in the Employment Agreement) or by the Grantee without
Good Reason (as defined in the Employment Agreement).
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on June
13, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to Dal-Tile
promptly, as repayment of the outstanding principal amount and accrued
interest of the Loans, the after-tax proceeds received by the Grantee from
any disposition of Common Stock, or options to acquire Common Stock, held
from time to time by the Grantee, and (b) the outstanding principal amount
and accrued interest of all the Loans shall be immediately payable in the
event the Grantee's employment by Dal-Tile is terminated by Dal-Tile with
"Cause" (as defined in the Employment Agreement) or by the Grantee without
Good Reason (as defined in the Employment Agreement). Repayments shall be
applied first to the Loan which was most recently made. Each Loan shall be
secured by such number of shares of Common Stock issued pursuant to the
Right that from time to time have a Fair Market Value equal to the
outstanding principal amount and accrued interest of all of the Loans.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative number of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date................................ 25%
On June 13, 1998................................. 50%
On June 13, 1999................................. 75%
On December 31, 1999............................. 100%
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason,
subject to Section 6.3 hereof.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative number of
Shares in which the Grantee may then be, or thereafter become, vested, only
if Dal-Tile reports, pursuant to its audited financial statements, positive
net income ("Net Income") for either its fiscal year ending December 31,
1998 or its fiscal year ending December 31, 1999 (the "Performance
Target"). The Right shall not be exercisable prior to the vesting thereof
and the time the Committee certifies that the Performance Target has been
satisfied. The Committee shall act within seven days with respect to
certification following the availability of the relevant audited financial
statements. For purposes of this Agreement, Net Income shall be calculated
without taking into account any charge against income which may arise as a
result of the Right granted pursuant to this Agreement or any other stock
appreciation right which may, from time to time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on June 13, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile; PROVIDED, HOWEVER, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 6.1 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) the Grantee shall be vested in, and shall be entitled to
exercise the Right with respect to, 100% of the Shares subject to the Right
upon the occurrence of any transaction or series of related transactions as
a result of which any person or "group" of persons (as such expression is
used under the 1934 Act, and the rules thereunder) other than DTI Investors
LLC or its members or any of their affiliates or successors (collectively,
an "Acquiring Person"): (i) becomes the owner of a greater number of Shares
than are then owned by DTI Investors LLC or its members or former members
(taken as a group), provided that the Acquiring Person owns at least 40% of
the issued and outstanding Shares; or (ii) has the power to elect a
majority of the Board; and
(b) in the event of a "Transaction" that does not also constitute
a "Non-Control Transaction" (each, as defined in the Non-Qualified Stock
Option Agreement, dated as of February 20, 1998, between the Grantee and
Dal-Tile), the Right shall, unless the Grantee and Dal-Tile shall otherwise
agree, automatically be converted into the right to receive, with respect
to each Share subject to the Right, at the consummation of such
Transaction, a payment of the same amount and kind of stock, securities,
cash, property or other consideration that each holder of a Share was
entitled to receive in such Transaction in respect of a Share, less the
Base Price; PROVIDED, HOWEVER, that the fair market value of such stock,
securities, cash, property or other consideration shall not exceed the
Ceiling Price less the Base Price. If more than one (1) form of
consideration is included in such Transaction, the various components
thereof shall be appropriately prorated; and
(c) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
change in the Shares resulting from a merger involving the Company.
Adjustments under this Section 6.2(c) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the termination of the Grantee's employment by
Dal-Tile with "Cause." In the event of the termination of the Grantee's
employment by Dal-Tile without Cause or by the Grantee with "Good Reason":
(i) on or prior to June 30, 1998, the Grantee shall be vested in 50% of the
Shares subject to the Right, which Right shall, notwithstanding such
vesting, become exercisable only in accordance with Section 3.2 hereof; and
(ii) after June 30, 1998, the Grantee shall be vested in 100% of the
Shares subject to the Right, which Right shall, notwithstanding such
vesting, become exercisable only in accordance with Section 3.2 hereof. In
the event of the termination of the Grantee's employment by the Grantee
without Good Reason, the Right, to the extent then vested, shall become
exercisable only in accordance with Section 3.2 hereof and shall terminate
on the earliest to occur of: (i) the tenth anniversary of the Grant Date;
and (ii) the date which is ten (10) days after the later of: (A) such
termination of the Grantee's employment; and (B) the date that achievement
of the Performance Target is certified, and the unvested portion of the
Right shall be forfeited. In the event of the termination of the Grantee's
employment by reason of the Grantee's death or "disability" (as such term
is used under the Employment Agreement), the Right, to the extent then
vested, shall be exercisable until the tenth anniversary of the Grant Date,
and the unvested portion of the Right shall be forfeited on the effective
date of such termination.
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Employment Agreement" shall mean the Employment
Agreement, dated as of June 13, 1997, and as amended from time to time, by
and between Dal-Tile and the Grantee.
(h) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(i) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(j) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(k) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(l) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(m) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
X.X. Xxxx Freeway
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxxxxxx Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
with a copy to:
Xxx X. Xxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Xxxxxx, LLP
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.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three months of exercise of the Right, payment
of the amount determined under Section 2 hereof will be made in cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, General Counsel
and Secretary
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1998, with respect to
_____ Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act.
The undersigned acknowledges that he/she understands that the Shares
are not so registered.
Please pay all cash to, and issue any certificate or certificates for
any Shares in the name of:
Name:
------------------------------------------------
Address:
---------------------------------------------
Social Security or Tax I.D. Number:
------------------
(Please print)
Signature
------------------------
Dated , 199 .
----- -
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxxxx X. Xxxxxxxx, 0000 Xxxxxx Xxxxx Xxxxx, Xxxxx, XX 00000
(the "Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 60,000 shares of the common stock, par value $.01
per share (the "Common Stock") of Dal-Tile (the "Shares") on the terms and
conditions set forth in this Agreement. The base price for each Share
covered by this Right shall be $9.01 as adjusted pursuant to this Agreement
(the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise, over the Base Price by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $11.94 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2.1
shall, in the sole discretion of the Committee, be made: (i) in cash; (ii)
by delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by the Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a loan in the event
of the "Termination With Cause" (as defined in the Stock Option Plan) of
the Grantee's employment by Dal-Tile or the termination of the Grantee's
employment voluntarily by the Grantee.
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on
September 1, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to
Dal-Tile promptly, as repayment of the outstanding principal amount and
accrued interest of the Loans, the after-tax proceeds received by the
Grantee from any disposition of Common Stock, or options to acquire Common
Stock, held from time to time by the Grantee, and (b) the outstanding
principal amount and accrued interest of all the Loans shall be immediately
payable in the event of the Termination With Cause of the Grantee's
employment by Dal-Tile or the termination of the Grantee's employment
voluntarily by the Grantee. Repayments shall be applied first to the Loan
which was most recently made. Each Loan shall be secured by any and all
shares of Common Stock and options to acquire Common Stock held by the
Grantee and by the Right.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative percentage of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date.................................. 25%
On June 13, 1998................................... 50%
On June 13, 1999................................... 75%
On December 31, 1999............................... 100%
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative percentage
of Shares subject to the Right in which the Grantee may then be, or
thereafter become, vested, only if Dal-Tile reports, pursuant to its
audited financial statements, positive net income ("Net Income") for either
its fiscal year ending December 31, 1998 or its fiscal year ending December
31, 1999 (the "Performance Target"). The Right shall not be exercisable
prior to the vesting thereof and the time the Committee certifies that the
Performance Target has been satisfied. The Committee shall act within seven
days with respect to certification following the availability of the
relevant audited financial statements. For purposes of this Agreement, Net
Income shall be calculated without taking into account any charge against
income which may arise as a result of the Right granted pursuant to this
Agreement or any other stock appreciation right which may, from time to
time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on September 1, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile; PROVIDED, HOWEVER, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 6.1 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) upon the consummation of a "Transaction" that does not also
constitute a "Non-Control Transaction" (each, as defined in the Stock
Option Plan), the Grantee shall, unless the Grantee and Dal-Tile shall
otherwise agree, be vested in, and shall be entitled to exercise the Right
with respect to, 100% of the Right, and the Grantee shall be entitled to
receive, with respect to each Share subject to the Right, upon exercise of
all or any portion of the Right, a payment of the same amount and kind of
stock, securities, cash, property or other consideration that each holder
of a Share was entitled to receive in such Transaction in respect of a
Share, less the Base Price; PROVIDED, HOWEVER, that the fair market value
of such stock, securities, cash, property or other consideration shall not
exceed the Ceiling Price less the Base Price. If more than one (1) form of
consideration is included in such Transaction, the various components
thereof shall be appropriately prorated; and
(b) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
changes in the Shares resulting from a merger involving Dal-Tile.
Adjustments under this Section 6.2(b) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the Termination With Cause of the Grantee's
employment by Dal-Tile. Unless the Committee determines otherwise, in the
event of the termination of the Grantee's employment for any reason other
than a Termination With Cause by Dal-Tile, the Right, to the extent then
vested, shall become exercisable only in accordance with Section 3.2 hereof
and shall terminate on the earliest to occur of: (i) September 1, 2007; and
(ii) the date which is ten (10) days (one (1) year in the case of a
termination by reason of death, disability or retirement on or after the
Grantee's sixty-fifth birthday or such earlier retirement age as may be
approved by the Committee) after the later of: (A) such termination of the
Grantee's employment; and (B) the date that achievement of the Performance
Target is certified, and the unvested portion of the right shall be
forfeited
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(h) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(i) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(j) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(l) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
0000 X.X. Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxxxx Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Any party may change its address for notice hereunder by notice
to the other parties hereto.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations, in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three (3) months of exercise of the Right,
payment of the amount determined under Section 2.1 hereof will be made in
cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1997, with respect to
Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act.
The undersigned acknowledges that he/she understands that the Shares
are not so registered.
Please pay all cash to, and issue any certificate or certificates for
any Shares in the name of:
Name:
------------------------------------------------
Address:
---------------------------------------------
Social Security or Tax I.D. Number:
------------------
(Please print)
Signature
------------------------
Dated , 199 .
----- -
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxx X. Xxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000 (the
"Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 50,000 shares of the common stock, par value $.01
per share (the "Common Stock") of Dal-Tile (the "Shares") on the terms and
conditions set forth in this Agreement. The base price for each Share
covered by this Right shall be $9.01 as adjusted pursuant to this Agreement
(the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise, over the Base Price by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $11.94 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2.1
shall, in the sole discretion of the Committee, be made: (i) in cash; (ii)
by delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by the Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a loan in the event
of the "Termination With Cause" (as defined in the Stock Option Plan) of
the Grantee's employment by Dal-Tile or the termination of the Grantee's
employment voluntarily by the Grantee.
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on April
18, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to Dal-Tile
promptly, as repayment of the outstanding principal amount and accrued
interest of the Loans, the after-tax proceeds received by the Grantee from
any disposition of Common Stock, or options to acquire Common Stock, held
from time to time by the Grantee, and (b) the outstanding principal amount
and accrued interest of all the Loans shall be immediately payable in the
event of the Termination With Cause of the Grantee's employment by Dal-Tile
or the termination of the Grantee's employment voluntarily by the Grantee.
Repayments shall be applied first to the Loan which was most recently made.
Each Loan shall be secured by any and all shares of Common Stock and
options to acquire Common Stock held by the Grantee and by the Right.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative percentage of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date....................................... 25%
On June 13, 1998........................................ 50%
On June 13, 1999........................................ 75%
On December 31, 1999.................................... 100%
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative percentage
of Shares subject to the Right in which the Grantee may then be, or
thereafter become, vested, only if Dal-Tile reports, pursuant to its
audited financial statements, positive net income ("Net Income") for either
its fiscal year ending December 31, 1998 or its fiscal year ending December
31, 1999 (the "Performance Target"). The Right shall not be exercisable
prior to the vesting thereof and the time the Committee certifies that the
Performance Target has been satisfied. The Committee shall act within seven
days with respect to certification following the availability of the
relevant audited financial statements. For purposes of this Agreement, Net
Income shall be calculated without taking into account any charge against
income which may arise as a result of the Right granted pursuant to this
Agreement or any other stock appreciation right which may, from time to
time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on April 18, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile;
PROVIDED, HOWEVER, that any fractional Shares resulting from any
such adjustment shall be eliminated. Adjustments under this Section 6.1
shall be made by the Committee, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding, and
conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) upon the consummation of a "Transaction" that does not also
constitute a "Non-Control Transaction" (each, as defined in the Stock
Option Plan), the Grantee shall, unless the Grantee and Dal-Tile shall
otherwise agree, be vested in, and shall be entitled to exercise the Right
with respect to, 100% of the Right, and the Grantee shall be entitled to
receive, with respect to each Share subject to the Right, upon exercise of
all or any portion of the Right, a payment of the same amount and kind of
stock, securities, cash, property or other consideration that each holder
of a Share was entitled to receive in such Transaction in respect of a
Share, less the Base Price; PROVIDED, HOWEVER, that the fair market value
of such stock, securities, cash, property or other consideration shall not
exceed the Ceiling Price less the Base Price. If more than one (1) form of
consideration is included in such Transaction, the various components
thereof shall be appropriately prorated; and
(b) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
changes in the Shares resulting from a merger involving Dal-Tile.
Adjustments under this Section 6.2(b) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the Termination With Cause of the Grantee's
employment by Dal-Tile. Unless the Committee determines otherwise, in the
event of the termination of the Grantee's employment for any reason other
than a Termination With Cause by Dal-Tile, the Right, to the extent then
vested, shall become exercisable only in accordance with Section 3.2 hereof
and shall terminate on the earliest to occur of: (i) April 18, 2007; and
(ii) the date which is ten (10) days (one (1) year in the case of a
termination by reason of death, disability or retirement on or after the
Grantee's sixty-fifth birthday or such earlier retirement age as may be
approved by the Committee) after the later of: (A) such termination of the
Grantee's employment; and (B) the date that achievement of the Performance
Target is certified, and the unvested portion of the right shall be
forfeited on the effective date of such termination.
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(h) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(i) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(j) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(l) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
0000 X.X. Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxx X. Xxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Any party may change its address for notice hereunder by notice
to the other parties hereto.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations, in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three (3) months of exercise of the Right,
payment of the amount determined under Section 2.1 hereof will be made in
cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
/s/ Xxx X. Xxxxx
--------------------------------------
Xxx X. Xxxxx
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1997, with respect to
_____ Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act. The undersigned acknowledges that
he/she understands that the Shares are not so registered.
Please pay all cash to, and issue any certificate or certificates for
any Shares in the name of:
Name:
------------------------------------------------
Address:
---------------------------------------------
Social Security or Tax I.D. Number:
------------------
(Please print)
Signature
------------------------
Dated , 199 .
----- -
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of the 20th day of February, 1998 (the "Grant
Date"), between Dal-Tile International Inc., a Delaware corporation
("Dal-Tile"), and Xxxx Xxxxxx, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
00000 (the "Grantee").
The parties hereto agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHT.
Dal-Tile hereby grants to the Grantee a Stock Appreciation Right (the
"Right") with respect to 50,000 shares of the common stock, par value $.01
per share (the "Common Stock") of Dal-Tile (the "Shares") on the terms and
conditions set forth in this Agreement. The base price for each Share
covered by this Right shall be $9.01 as adjusted pursuant to this Agreement
(the "Base Price").
2. AMOUNT AND FORM OF PAYMENT UPON EXERCISE OF RIGHT.
2.1 Upon exercise of all or any portion of the Right, the Grantee
shall be entitled to receive the amount determined by multiplying (i) the
excess (the "Single Share Excess") of the Fair Market Value of a Share on
the date of exercise, over the Base Price by (ii) the number of Shares in
respect of which the Right is being exercised; PROVIDED, HOWEVER, that for
purposes of determining the Single Share Excess, no amount of Fair Market
Value of a Share in excess of $11.94 (the "Ceiling Price") shall be taken
into account. Payment of the amount determined under this Section 2.1
shall, in the sole discretion of the Committee, be made: (i) in cash; (ii)
by delivery of Shares having an aggregate Fair Market Value on the date of
such delivery equal to the amount of such payment (a "Payment-In-Kind"); or
(iii) by a combination of the foregoing (a "Mixed Payment"), and shall be
paid within ten (10) business days after the date of exercise. In the event
that such payment is made as: (x) a Payment-In-Kind; or (y) a Mixed
Payment, and the sum of the federal, state and other governmental income
tax incurred by the Grantee with respect to the payment exceeds the cash
portion, if any, of such payment, the Committee shall make one or more
interest-bearing loans (each loan, a "Loan," and, collectively, the
"Loans") to the Grantee in an amount equal to such excess; PROVIDED,
HOWEVER, that Dal-Tile shall have no obligation to make a loan in the event
of the "Termination With Cause" (as defined in the Stock Option Plan) of
the Grantee's employment by Dal-Tile or the termination of the Grantee's
employment voluntarily by the Grantee.
2.2 Each Loan shall bear interest at the lowest rate permitted by the
Internal Revenue Service without the imputation of interest. The principal
amount and accrued interest on each Loan shall be due and payable on April
18, 2007; PROVIDED, HOWEVER, that (a) the Grantee shall pay to Dal-Tile
promptly, as repayment of the outstanding principal amount and accrued
interest of the Loans, the after-tax proceeds received by the Grantee from
any disposition of Common Stock, or options to acquire Common Stock, held
from time to time by the Grantee, and (b) the outstanding principal amount
and accrued interest of all the Loans shall be immediately payable in the
event of the Termination With Cause of the Grantee's employment by Dal-Tile
or the termination of the Grantee's employment voluntarily by the Grantee.
Repayments shall be applied first to the Loan which was most recently made.
Each Loan shall be secured by any and all shares of Common Stock and
options to acquire Common Stock held by the Grantee and by the Right.
3. VESTING; EXERCISABILITY; DURATION.
3.1 VESTING.
(a) Subject to Sections 6.2 and 6.3 hereof, the Grantee shall
vest in the cumulative percentage of Shares under the Right, at the times
provided in the following schedule:
APPLICABLE DATE CUMULATIVE PERCENTAGE OF SHARES
--------------- -------------------------------
On the Grant Date.................................... 25%
On June 13, 1998..................................... 50%
On June 13, 1999..................................... 75%
On December 31, 1999................................. 100%
(b) The unvested portion of the Right shall be forfeited upon the
termination of the Grantee's employment with Dal-Tile for any reason.
3.2 EXERCISABILITY.
Subject to Sections 6.2 and 6.3 hereof, the Grantee shall be
entitled to exercise the Right, with respect to the cumulative percentage
of Shares subject to the Right in which the Grantee may then be, or
thereafter become, vested, only if Dal-Tile reports, pursuant to its
audited financial statements, positive net income ("Net Income") for either
its fiscal year ending December 31, 1998 or its fiscal year ending December
31, 1999 (the "Performance Target"). The Right shall not be exercisable
prior to the vesting thereof and the time the Committee certifies that the
Performance Target has been satisfied. The Committee shall act within seven
days with respect to certification following the availability of the
relevant audited financial statements. For purposes of this Agreement, Net
Income shall be calculated without taking into account any charge against
income which may arise as a result of the Right granted pursuant to this
Agreement or any other stock appreciation right which may, from time to
time, be granted by Dal-Tile.
3.3 DURATION.
Unless earlier terminated in accordance with the terms of this
Agreement, the Right shall terminate on April 18, 2007.
4. MANNER OF EXERCISE OF RIGHT.
Subject to the terms and conditions of this Agreement, the Right may
be exercised only by giving written notice (the "Exercise Notice") to
Dal-Tile in the form of Exhibit A attached hereto, at its principal
executive office. Such notice shall state that the Grantee is electing to
exercise the Right, and the number of Shares in respect of which the Right
is being exercised, and shall be signed by the person or persons exercising
the Right. The date of exercise for purposes of this Agreement shall be the
date Dal-Tile receives the Exercise Notice. If requested by Dal-Tile, such
person or persons shall: (i) deliver this Agreement to the Secretary of
Dal-Tile who shall endorse thereon a notation of such exercise; and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Right.
5. NONASSIGNABILITY.
Neither the Right granted to the Grantee under this Agreement nor any
portion thereof shall be assignable or transferable (whether by operation
of law or otherwise, and whether voluntarily or involuntarily), other than
by will or by the laws of descent and distribution. The Right granted to
the Grantee under this Agreement shall be exercisable only by the Grantee
or his estate, heirs or personal representatives.
6. ADJUSTMENTS TO RIGHTS UPON CERTAIN EVENTS.
6.1 ADJUSTMENTS TO NUMBER OF SHARES AND CEILING AND BASE PRICES.
The number of Shares subject to this Right, the Ceiling Price and
the Base Price shall be equitably adjusted for any increase or decrease in
the number of issued Shares resulting from: (i) the subdivision or
combination of Shares or other capital adjustments; (ii) the payment of a
stock dividend or extraordinary cash dividend after the Grant Date; or
(iii) any other increase or decrease in the number of such Shares effected
without receipt of consideration by Dal-Tile; PROVIDED, HOWEVER, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 6.1 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.2 CHANGE OF CONTROL.
Notwithstanding anything contained in this Agreement to the
contrary:
(a) upon the consummation of a "Transaction" that does not also
constitute a "Non-Control Transaction" (each, as defined in the Stock
Option Plan), the Grantee shall, unless the Grantee and Dal-Tile shall
otherwise agree, be vested in, and shall be entitled to exercise the Right
with respect to, 100% of the Right, and the Grantee shall be entitled to
receive, with respect to each Share subject to the Right, upon exercise of
all or any portion of the Right, a payment of the same amount and kind of
stock, securities, cash, property or other consideration that each holder
of a Share was entitled to receive in such Transaction in respect of a
Share, less the Base Price; PROVIDED, HOWEVER, that the fair market value
of such stock, securities, cash, property or other consideration shall not
exceed the Ceiling Price less the Base Price. If more than one (1) form of
consideration is included in such Transaction, the various components
thereof shall be appropriately prorated; and
(b) in the event of a Non-Control Transaction, the Grantee shall
continue to vest in the Right only in accordance with Section 3.1 hereof,
which Right shall remain exercisable only in accordance with Section 3.2
hereof, and, the number of Shares subject to the Right, the Ceiling Price
and the Base Price shall be equitably adjusted by the Committee for any
changes in the Shares resulting from a merger involving Dal-Tile.
Adjustments under this Section 6.2(b) shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive.
6.3 TERMINATION OF EMPLOYMENT.
The Right (whether vested or unvested) shall terminate and expire
on the effective date of the Termination With Cause of the Grantee's
employment by Dal-Tile. Unless the Committee determines otherwise, in the
event of the termination of the Grantee's employment for any reason other
than a Termination With Cause by Dal-Tile, the Right, to the extent then
vested, shall become exercisable only in accordance with Section 3.2 hereof
and shall terminate on the earliest to occur of: (i) April 18, 2007; and
(ii) the date which is ten (10) days (one (1) year in the case of a
termination by reason of death, disability or retirement on or after the
Grantee's sixty-fifth birthday or such earlier retirement age as may be
approved by the Committee) after the later of: (A) such termination of the
Grantee's employment; and (B) the date that achievement of the Performance
Target is certified, and the unvested portion of the right shall be
forfeited on the effective date of such termination.
7. MISCELLANEOUS.
7.1 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number, words of the masculine gender shall
include the feminine and the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any gender.
(b) The term "affiliate" shall mean any person directly or
indirectly controlling, controlled by, or under common control with the
person of which it is an affiliate.
(c) The term "Board" shall mean the Board of Directors of
Dal-Tile.
(d) The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) The term "Committee" shall mean the Committee of the Board
appointed to administer the Stock Option Plan in accordance with the terms
of such plan.
(f) The term "control" shall mean with respect to any person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of equity interests, by contract or otherwise.
(g) The term "Fair Market Value" per Share as of a particular
date shall mean: (i) the closing sales price of a Share on the national
securities exchange on which the Shares are principally traded for the last
date (including the date of exercise of the Right) on which there was a
sale of the Shares on such exchange; or (ii) if the Shares are not then
traded on a national securities exchange, the average of the closing bid
and asked prices for the Shares in the over-the-counter market on which the
Shares are principally traded for the last date (including the date of
exercise of the Right) on which there was a sale of the Shares in such
market; or (iii) if the Shares are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.
(h) The term "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(i) The term "Stock Option Plan" shall mean the Dal-Tile
International Inc. 1997 Amended and Restated Stock Option Plan.
(j) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) There shall be included within the term "Dal-Tile" any
successor to Dal-Tile by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(l) There shall be included within the term "Shares" any Common
Stock, and any and all securities of any kind whatsoever of Dal-Tile which
may be issued after the date hereof in respect of, or in exchange for,
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of Dal-Tile or otherwise.
7.2 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and
performed all further acts and things and shall execute and deliver all
other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, and the consummation of the
transactions contemplated hereby.
7.3 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
7.4 INVALIDITY OF PROVISION.
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision,
in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised
or applied in a manner that renders it lawful and enforceable to the
fullest extent possible under law.
7.5 NOTICE.
Any notice or other communication required or permitted hereunder
shall be 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, 5 days after the date of deposit in the United
States mail, as follows:
(i) if to Dal-Tile, to:
Dal-Tile International Inc.
0000 X.X. Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
(ii) if to the Grantee, to:
Xxxx Xxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice
to the other parties hereto.
7.6 BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by
written agreement of the party against whom enforcement of such amendment,
modification or supplement is sought.
7.8 HEADING; EXECUTION IN COUNTERPARTS.
The headings and captions contained herein are for convenience
only and shall not control or affect the meaning or construction of any
provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
together shall constitute one and the same instrument.
7.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
7.10 RIGHT OF DISCHARGE RESERVED.
Nothing contained in this Agreement shall confer upon the Grantee
any right to continue in the employ or service of Dal-Tile or affect any
right which Dal-Tile may have to terminate the employment or services of
the Grantee.
7.11 WITHHOLDING.
The Company shall be entitled to withhold from any payments to
the Grantee an amount sufficient to satisfy any federal, state, and other
governmental tax required to be withheld in connection with any exercise of
the Right.
7.12 INTERPRETATION AND STOCKHOLDER APPROVAL.
(a) The Right granted under this Agreement is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code and the Committee shall interpret this Agreement accordingly.
(b) This Agreement and the grant of the Right hereunder is
subject to approval by Dal-Tile's stockholders in accordance with Section
162(m) of the Code.
7.13 NO RIGHTS AS A STOCKHOLDER.
Neither the Grantee nor any person succeeding to the Grantee's
rights hereunder shall have any rights as a stockholder with respect to any
Shares subject to the Right. Except for adjustments which the Committee may
make pursuant to Section 6.1 hereof, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property). Neither
the Grantee nor any person succeeding to the Grantee's rights hereunder
shall have any rights as a stockholder with respect to any Shares issuable
in connection with a Payment-In-Kind or a Mixed Payment until the date of
the issuance of a stock certificate to him or her for any such Shares. No
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
7.14 GRANTEE'S ACKNOWLEDGMENTS.
The Grantee agrees and acknowledges that no member of the
Committee shall be liable for any action or determination made in good
faith with respect to this Agreement. The Committee shall have the right to
make all determinations, in respect of this Agreement, which determinations
shall be final, conclusive and binding on the Grantee.
7.15 RESTRICTIONS.
(a) If the Committee shall at any time determine based on the
advice of counsel that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the issuance of Shares
hereunder, then such issuance shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Dal-Tile shall use its reasonable best
efforts to effect or obtain such Consent. If such Consent cannot be
effected or obtained within three (3) months of exercise of the Right,
payment of the amount determined under Section 2.1 hereof will be made in
cash.
(b) The term "Consent" as used herein with respect to the
issuance of Shares means: (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation; (ii) any and all written
agreements and representations by the Grantee or any person succeeding to
the Grantee's rights hereunder, as the case may be, with respect to the
disposition of the Shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any
such listing, registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or registration be
made; and (iii) any and all consents, clearances and approvals in respect
of the issuance of the Shares by any governmental or other regulatory
bodies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
DAL-TILE INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
/s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx
EXHIBIT A
EXERCISE NOTICE
[TO BE EXECUTED UPON EXERCISE OF STOCK APPRECIATION RIGHT]
To Dal-Tile International Inc.
The undersigned hereby irrevocably elects to exercise the Right
represented by the attached Stock Appreciation Rights Agreement (the
"Agreement"), dated as of the 10th day of October, 1997, with respect to
Shares, as provided for therein.
The undersigned represents and warrants to you that, with respect to
any amount paid to the undersigned by delivery of Shares:
ACQUISITION FOR OWN ACCOUNT. The undersigned is acquiring such Shares
for his/her own account for investment and not with a view to the sale or
distribution thereof or with any present intention of distributing or
selling the same.
SECURITIES ACT RESTRICTIONS. The undersigned covenants and agrees that
he/she will not sell, assign, transfer, pledge or otherwise dispose of any
of the Shares acquired by the undersigned hereunder unless and until they
are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or unless an exemption from such registration is
available and until the undersigned shall have delivered to Dal-Tile
International Inc. a written opinion of counsel reasonably satisfactory to
Dal-Tile International Inc. that the disposition is in compliance with the
requirements of the Securities Act.
The undersigned acknowledges that he/she understands that the Shares
are not so registered. Please pay all cash to, and issue any certificate or
certificates for any Shares in the name of:
Name:
------------------------------------------------
Address:
---------------------------------------------
Social Security or Tax I.D. Number:
------------------
(Please print)
Signature
------------------------
Dated , 199 .
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