AGREEMENT RE RESIGNATION AND CONSULTING
This Agreement re Resignation and Consulting is made as of this 21st day of
August, 1995 (this "Agreement"), by and among Xxxxx X. Xxxxx, Color Tile, Inc.,
a Delaware corporation ("Color Tile"), and Color Tile Holdings, Inc., a Delaware
corporation and the holder of 100% of the outstanding common stock of Color Tile
("Holdings").
WHEREAS, EML currently serves as the Chairman and Chief Executive Officer
of Color Tile pursuant to that certain Employment Agreement dated as of December
28, 1989, as amended as of January 3, 1994 (the "Employment Agreement"), and EML
also serves as a director and/or officer of Holdings and subsidiaries of Color
Tile and Holdings;
WHEREAS, EML owns 38,198 shares of Class C Stock of Holdings (the "Shares")
and holds options to purchase additional shares of Class C stock of Holdings
(the "Options") and;
WHEREAS, EML is desirous of resigning from the employment of Color Tile and
selling the Shares to Holdings on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. EML hereby resigns all positions as director, officer and/or employee of
Color Tile, Holdings and all subsidiaries of Color Tile and Holdings, such
resignations to be effective as of the date hereof (the "Resignation Date").
2. EML hereby agrees to provide consulting services to Color Tile, at such
times and places as Color Tile and EML may reasonably agree, either (a) for the
period from the Resignation Date through December 31, 1995 (the "Short Period"),
or (b) if Color Tile notified EML prior to January 1, 1996, that it desires that
EML provide consulting services through August 31, 1996 (the "Long Period"), for
the Long Period. Color Tile shall advance or promptly reimburse EML for all
expenses reasonably incurred by EML in performing consulting services hereunder,
provided that EML shall provide appropriate evidence substantiating such
expenses and shall not incur any travel or other non-routine expenses without
prior approval by Color Tile.
3. EML will deliver 12,732 of the Shares to Holdings on October 1, 1995,
and the remaining 25,466 Shares on January 1, 1996, provided that if Color Tile
elects the Long Period, EML will deliver no Shares on January 1, 1996, but
rather will deliver to Holdings 12,733 of the Shares on each of August 31, 1996
and August 31, 1997, in each case assuming Color Tile and Holdings have made all
payments required hereunder through such Share delivery dates. The Shares
deliverable by EML hereunder shall include all shares or other securities or
rights thereto issued in respect of the Shares between the date hereof and the
delivery of Shares to Holdings hereunder. On the
Resignation Date, EML shall return to Holdings the agreements evidencing
the Options and such Options shall thereupon be canceled and of no further force
or effect.
4. Holdings shall pay to EML $300,000 on October 1, 1995, and the following
payments will be made on the dated listed:
Color Tile Holdings Total
September 1, 1995 $2,500 $22,500 $25,000
October 1, 1995 $2,500 $22,500 $25,000
November 1, 1995 $2,500 $22,500 $25,000
December 1, 1995 $2,500 $22,500 $25,000
In addition, if Color Tile elects the Short Period, on January 1, 1996,
Color Tile shall pay to EML $36,750 and Holdings shall pay to EML $330,750.
Alternatively, if Color Tile elects the Long Period, on January 1, 1996, and on
the first day of each of the next succeeding 19 months, Color Tile will pay to
EML $2,500 and Holdings will pay to EML $22,500. The parties agree that all
payments to EML made pursuant to this paragraph 4 by Color Tile shall be deemed
in consideration for the consulting services to be provided by EML to Color Tile
and by Holdings shall be deemed purchase price for the Shares. EML acknowledged
that no bonus shall be payable to him with respect to Color Tile's current
fiscal year and that no amounts shall be payable to him pursuant to Section 7 of
the Employment Agreement (other than as specified in 5(b) below) upon his
resignation from the employment of Color Tile.
5. Upon the Resignation Date, the obligations of Color Tile and EML under
the Employment Agreement shall terminate and be of no further force and effect,
except as follows:
(a) Color Tile shall promptly pay to EML all Accrued Obligations as defined
in Section 7.1 of the Employment Agreement plus three weeks of accrued vacation;
(b) Color Tile shall continue to pay EML's health insurance premiums and
car allowance during the period from the Resignation Date through August 31,
1997, provided that Color Tile's obligation to make such payments shall
terminate immediately upon the commencement by EML of full-time employment
(other than self-employment), it being understood that, except as aforesaid,
after the Resignation Date Color Tile shall no longer pay to or for the benefit
of EML any country club dues, life insurance premiums or other benefits or
perquisites payable to or for the benefit of directors, officers or employees of
Color Tile of Holdings;
(c) EML shall be obligated pursuant to the covenant not to compete and
related provisions set forth in Sections 8.4(a), 8.4(b) and 8.6 of the
Employment Agreement provided that (i) such covenants shall terminate and be of
no further force or
effect on August 31, 1996, and (ii) from and after the Resignation Date EML
shall be free to become an employee of or consultant to any business not engaged
in the retail distribution of carpet, tile or other products presently sold by
Color Tile or Holdings or their subsidiaries; and
(d) EML acknowledges and agrees that he shall remain bound following the
Resignation Date by Sections 8.1, 8.2 and 8.3 of the Employment Agreement.
6. EML agrees that he will not disparage Color Tile, Holdings or any of
their respective subsidiaries, affiliates, directors, officers, employees,
agents or representatives, and Color Tile and Holdings agree that they will not,
and will endeavor to cause such other persons and entities no to, disparage EML.
The parties agree that all press releases and other written communications to
employees, vendors and the like shall reflect a mutually amicable attitude with
respect to the subject matter of this Agreement, and Color Tile and Holdings
agree to provide EML a reasonable opportunity to review and comment upon any
said releases or other communications before the issuance thereof.
7. EML, on his behalf and on behalf of his heirs, successors and assigns,
hereby releases, relinquishes and forever discharges Color Tile, Holdings,
Investcorp S.A. and their respective subsidiaries, affiliates, directors,
officers, employees, shareholders, agents and representatives from any and all
claims, damages, losses, costs, expenses, liabilities or obligations, whether
known or unknown (other than any such claims, damages, losses, costs, expenses,
liabilities or obligations (i) covered by any indemnification arrangement or
bylaw of Color Tile or Holdings with respect to EML, (ii) arising under any
written employee benefit plan or arrangement (whether or not tax-qualified)
covering EML, or (iii) arising under this Agreement), which EML has incurred or
suffered or may incur or suffer as a result of his employment by Color Tile or
the termination of such employment or his ownership of the Shares or the
repurchase of the Shares by Holdings, or the surrender and cancellation of the
Options, and specifically including any such claims, damages, losses, costs,
expenses, liabilities or obligations under the Employment Agreement (except as
otherwise provided in this Agreement) or under the Stock Subscription and
Stockholders Agreement dated as of December 28, 1989, by and among Holdings, EML
and certain other stockholders of Holdings. Color Tile and Holdings, on their
own behalf and on behalf of their subsidiaries and affiliates, hereby release,
relinquish and forever discharge EML, and his heirs, successors and assigns,
from any and all claims, damages, losses, costs, expenses, liabilities or
obligations, whether known or unknown (other than any such claims, damages,
losses, costs, expenses, liabilities or obligations arising under this
Agreement), which any of them has incurred or suffered or may incur or suffer as
a result of EML's employment by Color Tile or the termination of such
employment.
8. Color Tile and Holdings agree to continue EML as a named insured under
any directors and officers liability insurance policies that they now maintain
until the
earlier of the termination of such insurance coverage (whether under the
existing or replacement policies) or the fifth anniversary of the date above.
9. All disputes arising in connection with this Agreement shall by finally
settled by arbitration in accordance with the rules of the American Arbitration
Association and any such arbitration proceeding shall take place in Fort Worth,
Texas.
10. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND ALL QUESTIONS RELATING TO
THE VALIDITY AND PERFORMANCE HEREOF AND REMEDIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAW.
In Witness Whereof, the parties have executed this Agreement as of the date
first above written.
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
COLOR TILE, INC.
By /s/ Xxxx X. Xxxxxxxxxxxx
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COLOR TILE HOLDINGS, INC.
By /s/ Xxxx X. Xxxxxxxxxxxx
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