AGREEMENT RE RESIGNATION AND CONSULTING
This Agreement re Resignation and Consulting is made as of this 25th day of
July, 1995 (this "Agreement"), by and among N. Xxxxxxxx Xxxxx ("NLN"), 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, NLN currently serves as the President and Chief Operating 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 NLN
also serves as a director and/or officer of Holdings and subsidiaries of Color
Tile and Holdings;
WHEREAS, NLN owns 18,279 shares of Class C Stock of Holdings (the "Shares")
and holds options to purchase an additional 18,264 shares of Class C Stock of
Holdings (the "Options");
WHEREAS, NLN 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. NLN hereby resigns all positions as a director, officer and/or employee
of Color Tile, Holdings and all subsidiaries of Color Tile and Holdings, such
resignations to be effective September 30. 1995 (the "Resignation Date").
2. NLN hereby agrees to provide consulting services to Color Tile, at such
times and places as Color Tile may reasonably request, either (a) for the period
from October 1, 1995 through December 31, 1995 (the "Short Period"), or (b) if
Color Tile notifies NLN prior to January 1, 1996, that it desires that NLN
provide consulting services through September 30, 1996 (the "Long Period"), for
the Long Period. Color Tile shall advance or promptly reimburse NLN for all
expense reasonably incurred by NLN in performing consulting services hereunder,
provided that NLN 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. NLN will deliver 6,243 of the Shares to Holding on the Resignation Date
and the remaining 12,486 shares on January 1, 1996, provided that if Color Tile
elects the long period, NLN will deliver no Shares on January 1, 1996, but
rather will deliver to Holdings 6,243 of the Shares on each of September 30,
1996 and September 30, 1997, in each case assuming Color Tile and Holdings have
made all payments required hereunder through such Share delivery dates. The
Shares deliverable by NLN 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, NLN 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 NLN $250,000 on October 1, 1995, and the following
payments will be made on the dates listed:
Color Tile Holdings Total
October 1, 1995 $8,475 $12,358 $20,833
November 1, 1995 $8,475 $12,358 $20,833
December 1, 1995 $8,475 $12,358 $20,833
In addition, if Color Tile elects the Short Period, on January 1, 1996,
Color Tile shall pay to NLN $124,629 and Holdings shall pay to NLN $181,622.
Alternatively, if Color Tile elects the Long Period, on January 1, 1996, and on
the first day of each of the next succeeding 20 months, Color Tile will pay to
NLN $5,932.14 and Holdings will pay to NLN $14,901.23. The parties agree that
all payments to NLN made pursuant to this paragraph 4 by Color Tile shall be
deemed in consideration for the consulting services to be provided by NLN to
Color Tile and by Holdings shall be deemed purchase price for the Shares. NLN
acknowledges 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 Resignation Date, the obligations of Color Tile and NLN under the
Employment Agreement shall terminate and be of no further force and effect,
except as follows:
a) Color Tile shall remain obligated pursuant to Section 5 of the
Employment Agreement (but clause (ii) thereof shall no longer be operative or
effective) with respect to a sale of NLN's Fort Worth residence on or before
September 30, 1997;
b) Color Tile shall promptly pay to NLN all Accrued Obligations as defined
in Section 7.1 of the Employment Agreement;
c) Color Tile shall continue to pay NLN's health insurance premiums and car
allowance during the two-year period from the Resignation Date through September
30, 1997, provided that Color Tile's obligation to make such payments shall
terminate immediately upon the commencement by NLN 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 NLN 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 or Holdings;
d) NLN 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 September 30, 1996, and (ii) from and after the
Resignation Date NLN 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
e) NLN 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. NLN 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 not to, disparage
NLN. 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 NLN a reasonable opportunity to review and comment
upon any said releases or other communications before the issuance thereof. From
the date hereof through the Resignation Data, NLN agrees to cooperate fully with
and as requested by Color Tile in connection with a search for his successor and
with such person or persons to whom Color Tile may assign responsibilities,
whether on an interim or longer term basis, in areas within NLN's scope of
authority.
7. NLN, 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 NLN, (ii) arising under any
written employee benefit plan or arrangement (whether or not tax-qualified)
covering NLN, or (iii) arising under this Agreement), which NLN 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,
NLN, 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 NLN, and his heirs, successors and assigns, from any and all
claims, damages, losses, costs, expenses, liabilities or obligations, whether
known or unknown (other than 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 NLN's employment by
Color Tile or the termination of such employment.
8. Color Tile and Holdings agree to continue NLN 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
hereof.
9. All disputes arising in connection with this Agreement shall be finally
settled by arbitration in accordance with the rules of the American Arbitration
Association and any such arbitration proceedings 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 B0E DETERMINED
IN ACCORDANCE WITH SUCH LAW.
In Witness Whereof, the parties have executed this Agreement as of the date
first above written.
/s/ N. Xxxxxxxx Xxxxx
N. Xxxxxxxx Xxxxx
COLOR TILE, INC.
By /s/ Xxxxx X. Xxxxx
COLOR TILE HOLDINGS, INC.
By /s/ Xxxxx X. Xxxxx
