Exhibit 10.1

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as
of November 4, 2009 (the “Effective Date”), by and between Mohawk Industries,
Inc., (the “Company”) and W. Christopher Wellborn (the “Executive”).

The Company and Executive were previously parties to an EMPLOYMENT AGREEMENT
dated November 15, 2005 which was amended and restated in an AMENDED AND
RESTATED EMPLOYMENT AGREEMENT dated May 1, 2008, and now both desire to amend
and restate the terms of that AMENDED AND RESTATED EMPLOYMENT AGREEMENT in this
Agreement.

The Company desires to employ the Executive as its President and Chief Operating
Officer and the Executive desires to accept such employment on the terms and
conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual premises and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which is acknowledged, the parties hereby agree as follows:

1. Term of Employment. The term of the Executive’s employment under this
Agreement shall commence on the Effective Date and shall continue through and
expire on December 31, 2019 unless earlier separation from service occurs as
herein provided (the “Term”).

2. Duties of Employment. The Executive hereby agrees for the Term to render his
exclusive services to the Company as its President and Chief Operating Officer,
in connection therewith, to perform such duties commensurate with his office as
he shall reasonably be

 

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directed by the Board of Directors of the Company (the “Board”) to perform. The
Executive shall devote during the Term all of his business time, energy and
skill to his executive duties hereunder and perform such duties faithfully and
efficiently, except for reasonable vacation and except for periods of illness or
incapacity. Notwithstanding the above, Executive may serve on boards of
directors of charitable or not-for-profit organizations that do not interfere
with his service to the Company. When and if requested to do so by the Board,
the Executive shall, for no additional compensation, serve as a director of the
Company and/or a director or officer of any subsidiary or affiliate of the
Company, provided that the Executive shall be indemnified for liabilities
incurred by him in his capacity as a director or an officer in accordance with
an Indemnification Agreement as provided in the Company’s Certificate of
Incorporation and By-Laws as in effect from time to time. Executive shall resign
as a director of the Company and all affiliates and subsidiaries of the Company
upon his separation from service with the Company.

3. Compensation and Other Benefits.

3.1 Salary. As an element of compensation for services to be rendered by the
Executive during the Term, the Company shall pay to the Executive a salary of
$850,000 per year (which may be increased from time to time by the Board (the
“Annual Salary”)), payable in accordance with the Company’s usual payroll
practices. The Executive shall be eligible to receive annual salary reviews and
salary increases as authorized by the Board.

3.2 Bonus. In addition to his Annual Salary, the Executive shall be eligible to
be paid a bonus in respect of each fiscal year of the Company (the “Annual
Bonus”) in accordance with the Company’s bonus plan applicable to similarly
situated executives and with opportunity levels not less than those of similarly
situated executives (the “Plan”) except as set forth below, which Annual Bonus
shall be determined by the Compensation Committee of the

 

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Board. As of the Effective Date, the Annual Bonus for 2009 shall be based on
(i) 36% of the amount of the Annual Salary upon attainment of the “threshold”
performance goal and other Company goals established under the Plan as
determined by the Compensation Committee of the Board and the Board and (ii) a
“target” of 90% of the amount of the Annual Salary upon attainment of the
“target” performance goal and other Company goals established under the Plan as
determined by the Compensation Committee of the Board and the Board and (iii) a
maximum of 135% of the amount of the Annual Salary upon attainment of the
“maximum” performance goal and other Company goals established under the Plan as
determined by the Compensation Committee of the Board and the Board. In this
regard, the Compensation Committee shall determine achievement of Company
performance goals no less favorably in determining an Annual Bonus award for
Executive than it does in determining Annual Bonus awards for similarly situated
executives. Should Executive exercise any of the 102,000 Options (as defined in
Section 3.3 below), he shall be ineligible to receive an Annual Bonus applicable
to performance for the fiscal year during which the exercise occurred as well as
the next fiscal year. The Compensation Committee of the Board and the Board
shall have the right to adjust, modify or amend the annual bonus program (as
well as the right to award bonuses based on performance or other criteria other
than as set forth in (i)-(iii) above or in excess of levels set forth in
(i)–(iii) above) in its discretion. The term “Annual Bonus” shall not include
any special bonuses or payments or any bonuses or payments made that were
outside of or otherwise not within the terms of the Plan.

3.3 Stock Based Awards. Executive has received and, in the future during the
Term, shall be eligible to receive grants of Company stock options, restricted
stock, restricted stock units and other forms of Company stock-based awards as
determined by the Compensation

 

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Committee of the Board in a manner comparable to the method applied to similarly
situated Company executives (collectively, “General Stock Awards”). For purposes
of this Agreement, (i) “General Stock Awards” shall include all stock based
awards granted to Executive prior to the Effective Date, (ii) all “General Stock
Awards” granted in the form of stock options to Executive prior to calendar year
2008 (total of 102,000) shall be referred to as the “102,000 Options,” and
(iii) the “Special RSU Awards” referenced in Section 3.4 below shall
specifically not be considered “General Stock Awards.” All outstanding General
Stock Awards and Special RSU Awards shall vest (and, in the case of RSUs,
convert to shares) upon a “change in control” of the Company as such term is
defined in the Mohawk Industries, Inc. 2007 Incentive Plan (“2007 Plan”).

3.4 Special Restricted Stock Unit Awards. On the Effective Date, the Company
shall grant Executive 90,000 restricted stock units (“2009 Special RSU Award”)
and, should Executive remain employed with the Company on November 5, 2010, an
additional 60,000 restricted stock units on November 5, 2010 (“2010 Special RSU
Award”) (collectively, both the 2009 Special RSU Award and the 2010 Special RSU
Award shall be referred to as the “Special RSU Awards”). The Special RSU Awards
will be granted under (and governed by the terms of) the 2007 Plan except as set
forth below, and will be scheduled to vest and convert to shares as follows
(subject to the conditions set forth below):

a. 15,000 restricted stock units under the 2009 Special RSU Award will vest and
convert to shares on October 31 of each of 2014, 2015, 2016, 2017 and 2018, and

b. 15,000 restricted stock units under the 2009 Special RSU Award and all 60,000
restricted stock units under the 2010 Special RSU Award will vest and convert to
shares on October 31, 2019 and December 31, 2019, respectively.

 

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Vesting of the restricted stock units under the Special RSU Award shall be
conditioned on (i) Executive remaining employed continuously by the Company from
the Effective Date to such scheduled vesting date, subject to Section 5 of this
Agreement and (ii) the Company achieving positive net operating income in at
least one of the 2010-2013 calendar years as determined by the Compensation
Committee of the Board and excluding the impact of any event set forth in
section (a) – (h) of the 2007 Plan (“Base Performance Metric”). Subject to
Section 5 of this Agreement, all unvested restricted stock units under the
Special RSU Awards shall be immediately cancelled upon termination of
Executive’s employment or, if condition (ii) above is not achieved, on March 15,
2014. Except as otherwise set forth in this Agreement, the terms and conditions
of the Special RSU Awards shall be set forth in award certificates which shall
be substantially similar to the terms and conditions of restricted stock unit
awards the Company has previously granted Executive, provided that Section 14.8
of the 2007 Plan (and corresponding award certificate language) regarding
special vesting treatment of awards upon retirement shall not apply to the
Special RSU Awards.

3.5 Participation in Employee Benefit Plans. Commencing on the respective
eligibility dates of the employee benefit plans and subject to the terms of such
employee benefit plans, during the Term, the Executive shall be permitted to
participate in any group life, hospitalization of disability insurance plan,
health program, pension plan, similar benefit plan or other so-called “fringe
benefit programs” of the Company as now existing or as may hereafter be revised
or adopted in which similarly situated Company executives are eligible to
participate.

 

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3.6 Vacation. The Executive shall be entitled to vacation based on the Company
vacation policy, but in any event not less than three (3) weeks vacation per
annum. Upon Executive’s completion of fifteen (15) years of service with the
Company or its subsidiaries, he shall become entitled to four (4) weeks of
vacation per annum.

4. Covenants by Executive. In order to induce the Company to enter this
Agreement, the Executive hereby agrees as follows:

4.1 Definitions. The following definitions shall apply to this Agreement.

(i) The term “Trade Secret,” whether in the singular or plural, means any
Confidential Information (as defined in Section 4.1(ii) below) which constitutes
a trade secret of the Company, or any of the Company’s subsidiaries, under the
Georgia Trade Secrets Act of 1990, as amended, O.C.G.A. § 10-1-760, et seq.

(ii) The term “Confidential Information” means any information, regardless of
form, concerning any aspect of the business of the Company, or the business of
any of the Company’s subsidiaries, which is not generally known to the Company’s
competitors and which the Company desires and makes reasonable efforts to keep
confidential. Confidential Information includes, but is not limited to,
information relating to customers and potential customers, suppliers, and
potential suppliers, contracts with customers and suppliers, employees,
personnel acquisition plans, pricing of products and services, financial
information, financial projections, budget information and procedures, marketing
plans and strategies, market research, technical processes, and product
research. After the first anniversary of the Executive’s separation from the
Company, Confidential Information shall not include any information that does
not constitute a Trade Secret.

 

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4.2 Acknowledgments of Executive. The Executive acknowledges that his work for
the Company will give him access to Trade Secrets and Confidential Information.
The Executive further acknowledges that he inevitably would use, or
inadvertently disclose, Trade Secrets and Confidential Information if, at any
time within five years of his separation from the Company, he were to work or
consult for any competitor of the Company, or any of the Company’s subsidiaries,
in a capacity requiring high-level management expertise with respect to any
aspect of the manufacture or distribution of commercial or residential floor
covering (the “Competitive Capacity”). In order to protect the Company’s
goodwill, Trade Secrets and Confidential Information (and in recognition of the
extension of the stock option exercise period as set forth in Section 5 and
grant of the Special RSU Awards), the Executive agrees that during his
employment and for a period of five years after separation from the Company,
(i) he will not work or consult in any Competitive Capacity within the United
States for a Competitor of the Company or any of its subsidiaries and (ii) he
will not, directly or indirectly, individually or in association with others,
solicit for employment or as a consultant any employee of the Company or its
subsidiaries without the written approval of the Company.

4.3 Confidential Information. Except as required by his work for the Company,
The Executive will not at any time, either during or after his employment with
the Company, communicate or disclose to any person, firm, corporation or other
entity, or use for his benefit or for the benefit of any person, firm,
corporation or other entity, directly or indirectly, any Trade Secret or
Confidential Information.

4.4 Company Property. All memoranda, notes, lists, records and other documents
or papers, (and all copies thereof), including such items stored in computer
memories, on microfiche or by any means, made or controlled by or on behalf of
the Executive, or made

 

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available to the Executive relating to the Company, or any of the Company’s
subsidiaries, are and shall remain the Company’s property and shall be delivered
to the Company upon the Executive’s separation from the Company, unless
requested earlier by the Company.

4.5 Conflicts of Interest. During his employment with the Company, the Executive
shall at all times strictly comply with the Company’s policies concerning
conflicts of interest.

4.6 Survival of Obligations. The Executive’s obligations under this Section 4
shall survive the Term of this Agreement and the Executive’s employment with the
Company.

5. Separation from Service.

5.1 Death. If the Executive dies during the Term, this Employment Agreement
shall terminate immediately, except that the Executive’s legal representatives
shall be entitled to receive any Annual Salary to the extent such Annual Salary
has accrued and remains payable up to the date of the Executive’s death (to be
paid in accordance with the Company’s usual payroll practices), plus a portion
of the Executive’s Annual Bonus for the year during which Executive dies (with
the “target” Annual Bonus being deemed to have been achieved), as set forth in
Section 3.2 computed on a pro rata basis (to be paid as promptly as practicable
but no later than 10 days after the date of Executive’s death), and any benefits
to which the Executive, his heirs or legal representatives may be entitled under
and in accordance with the terms of any employee benefits plan or program
maintained by the Company. Upon the executive’s death during his continuous
employment, (i) all of his outstanding General Stock Awards shall vest (other
than the 102,000 Options which shall be immediately cancelled) and, in the case
of stock options other than the 102,000 Options, be fully exercisable to his
named beneficiary for the shorter of a five year period following separation of
service or the remaining term of the

 

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applicable stock option (“Exercise Period”) and (ii) the greater of (a) 15,000
restricted stock units under the Special RSU Awards multiplied by the number of
full 12 month periods of Executive’s continuous employment with the Company
following the Effective Date until his death (less the number of such restricted
stock units that may have vested prior to his death) or (b) 45,000 such
restricted stock units under his Special RSU Awards shall vest as follows: 60%
of such amount shall vest and convert to shares 30 days following Executive’s
death, 20% of such amount shall vest and convert to shares on the first
anniversary of his death and the final 20% of such amount shall vest and convert
to shares on the second anniversary of his death (but in any event on the tenth
anniversary of the applicable grant date, if earlier). Such restricted stock
units shall vest first from the 2009 Special RSU Award until all such restricted
stock units are vested and then, if necessary, from the 2010 Special RSU Award.
Upon Executive’s death, those outstanding restricted stock units from the
Special RSU Awards not eligible for such vesting shall be immediately cancelled.

5.2 Upon Disability. If the Executive becomes disabled during his employment
hereunder so that he is unable substantially to perform his services hereunder
for 180 consecutive days, then the term of this Agreement may be terminated by
resolution of the Board 60 days after the expiration of such 180 days, such
termination to be effective upon delivery of written notice to the Executive of
the adoption of such resolution (“Disability Termination Date”); provided, that
the Executive shall be entitled to receive any accrued and unpaid Annual Salary
through such effective date of separation from service (to be paid in accordance
with the Company’s usual payroll practices), plus a portion of the Executive’s
Annual Bonus during the year of the Disability Termination Date (with the
“target” Annual Bonus being deemed to have been achieved), as set forth in
Section 3.2 computed on a pro rata

 

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basis (to be paid as promptly as practicable but no later than 10 days after the
Executive’s separation from service), and any benefit to which the Executive may
be entitled under and in accordance with the terms of any employee benefit plan
or program maintained by the Company. Upon the executive’s disability during his
continuous employment, (i) all of his outstanding General Stock Awards shall
vest (other than the 102,000 Options which shall be immediately cancelled) and,
in the case of stock options other than the 102,000 Options, be fully
exercisable for the duration of Exercise Period and (ii) the greater of
(a) 15,000 restricted stock units under the Special RSU Awards multiplied by the
number of full 12 month periods of Executive’s continuous employment with the
Company following the Effective Date until the Disability Termination Date (less
the number of such restricted stock units that may have vested prior to the
Disability Termination Date) or (b) 45,000 such restricted stock units under his
Special RSU Awards shall vest and convert to shares as follows: 60% of such
amount shall vest and convert to shares on the Disability Termination Date, 20%
of such amount shall vest and convert to shares on the first anniversary of the
Disability Termination Date and the final 20% shall vest and convert to shares
on the second anniversary of the Disability Termination Date (but in any event
on the tenth anniversary of the applicable grant date, if earlier). Such
restricted stock units shall vest first from the 2009 Special RSU Award until
all such restricted stock units are vested and then, if necessary, from the 2010
Special RSU Award. On the Disability Termination Date, those outstanding
restricted stock units from the Special RSU Awards not eligible for such vesting
shall be immediately cancelled.

5.3 Separation from Service for Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by serving
notice, effective in accordance with its terms, to separate the Executive from
service under this

 

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Agreement and discharge the Executive for “Cause” (as defined below). If such
right is exercised, the Executive shall be entitled to receive unpaid and
accrued Annual Salary prorated through the date of such separation from service,
any benefits otherwise required to be paid under applicable law. Except for such
payments, the Company shall be under no further obligation to the Executive. In
this regard, all (i) unvested General Stock Awards, (ii) all vested but
unexercised General Stock Awards and (iii) all unvested restricted stock units
under the Special RSU Awards shall be immediately cancelled. As used in this
Section 5, the term “Cause” shall mean and include (i) the conviction of or plea
of guilty by the Executive of any felony or other serious crime involving the
Company or (iii) gross or willful misconduct by the Executive in the performance
of his duties hereunder; provided however, that no act shall be considered gross
or willful misconduct if the Executive reasonably believes he was acting in good
faith or in a manner not opposed to the interests of the Company. The Company
shall be entitled to separate the Executive from service for Cause only upon
approval of a resolution adopted by the affirmative vote of not less than
two-thirds of the membership of the Board (excluding Executive). The Company
agrees to provide to the Executive prior written notice (the “Notice”) of its
intention to separate the Executive from service for Cause, such notice to state
in detail the particular acts or failure to act which constitute grounds for the
separation from service. The Executive shall be entitled to a hearing before the
Board to contest the Board’s findings, and to be accompanied by counsel. Such
hearing shall be held with 15 days of the request thereof to the Company by the
Executive, provided that such request must be made within 15 days of delivery of
the Notice. If, following any such hearing, the Board maintains its
determination to separate the Executive’s service for Cause, the effective date
of such separation from service shall be as specified in the Notice.

 

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5.4 Separation from Service Without Cause. The Company shall have the right at
any time during the Term to separate the Executive from service hereunder
without Cause. Upon such a “separation from service” (as defined in Code
Section 409A), or the separation from service by the Executive for Good Reason,
and subject to (i) Executive executing a separate written agreement releasing
Company, its affiliates and employees from all employment related claims,
(ii) Executive’s continued compliance with the provisions of this Agreement that
survive termination, including Section 4 and (iii) Executive not having
exercised any of the 102,000 Options, the Company’s sole obligation hereunder,
shall be to pay (or, in the case of benefits specified in clause (iii) below,
provide) to the Executive;

(i) an amount equal to any Annual Salary accrued and due and payable to the
Executive hereunder on the date of separation from service (to be paid in
accordance with the Company’s usual payroll practices),

(ii) continuation of Executive’s Annual Salary for a two year period after the
date of Executive’s separation from service (to be paid in accordance with the
Company’s usual payroll practices) following the date of termination or such
later date as may be required pursuant to Section 10 hereof,

(iii) all benefits specified in Section 3.5 hereof during the two year period
following such separation from service, (to the extent Executive’s is no longer
eligible to receive the Section 3.5 benefits during this two year period due to
change in employment status, Company shall reimburse Executive’s reasonable
expenses in securing comparable benefits during such time),

 

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(iv) an amount equal to 90% of Executive’s Annual Salary for the year in which
separation from service occurs (to be paid once during each of the two fiscal
years following the year during which separation occurs), with each such payment
to be reduced by the amount the Company may have contributed to Executive’s
401(k) account with the Company during the prior fiscal year, and

(v) notwithstanding anything set forth in the terms and conditions of applicable
General Stock Award agreements, (a) the General Stock Awards granted prior to
such separation shall immediately vest (other than the 102,000 Options which
shall be immediately cancelled) and, in the case of stock options other than the
102,000 Options, shall remain exercisable for Exercise Period and (b) provided
that the Base Performance Metric has been achieved prior to such separation (or
if the separation occurs during the second half of a fiscal year, if the Base
Performance Metric is achieved during such year), 15,000 restricted stock units
under his Special RSU Awards shall vest and convert to shares on the later of
(I) the date of the Executive’s separation from service or (II) the date on
which the compensation Committee of the Board certifies the achievement of the
Base Performance Metric (first from the 2009 Special RSU Award until all such
restricted stock units have vested and then, if necessary from 2010 Special RSU
Award) for each full 12 month period of Executive’s employment with the Company
following the Effective Date until such separation, which number of units shall
be pro-rated for

 

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each full month of any partial year (less the number of such restricted stock
units under the Special RSU Awards that have vested prior to such separation),
with the remaining restricted stock units under the Special RSU Awards being
immediately cancelled.

For purposes of this Agreement, “Good Reason” shall mean (i) a reduction in the
Annual Salary or Annual Bonus opportunity as specified in Section 3.1 or 3.2,
respectively (ii) a material diminution in Executive’s duties or
responsibilities, (iii) an adverse change to the Executive’s title of
“President” of the Company, or (iv) a material breach of this Agreement by the
Company. To the extent required to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), as determined by the Company, one
or more payments under this Section 5.4 shall be delayed for a six-month period
following Executive’s separation from service, within the meaning of Code
Section 409A. If and to the extent required to prevent a violation of Code
Section 409A, Executive will pay the entire cost of any insurance coverage for
the first six (6) months after separation from service and the Company will
reimburse Executive for the Company’s share of such costs on the six-month
anniversary of Executive’s separation from service, as defined in Code
Section 409A.

5.5 Other. Except as otherwise provided herein, upon the expiration or other
termination of this Agreement, including the resignation of Executive, all
obligations of the Company shall forthwith terminate, except as to any rights as
provided in applicable General Stock Award agreements, Special RSU Award
Agreements and except as otherwise required by applicable law.

 

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6. Expenses.

6.1 General. During the Term the Executive will be reimbursed for his reasonable
expenses incurred for the benefit of the Company in accordance with the general
policy of the Company or directives and guidelines established by management of
the Company and upon submission of documentation satisfactory to the Company.
With respect to any expenses that are to be reimbursed by the Company to the
Executive, the Executives shall be reimbursed upon his presenting to the Company
an itemized expense voucher.

7. Provisions.

7.1 Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, telegraphed, telexed,
sent by facsimile transmission, or sent by certified, registered or express
mail, postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed, or sent by facsimile transmission or, if
mailed, five days after the date of deposit in the United States mail, as
follows:

 

  (i) if to the Company, to:

Mohawk Industries, Inc.

160 S. Industrial Boulevard

Calhoun, GA 30701

Attention: General Counsel

 

  (ii) if to the Executive, to:

W. Christopher Wellborn

Any party may change its address for notice hereunder by notice to the other
party hereto.

7.2 Entire Agreement. This Agreement, the General Stock Award Agreements and the
Special RSU Award Agreements contain the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements,
written or oral, with respect thereto.

 

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7.3 Waivers and Agreements. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any right, power or privilege
hereunder, nor any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege hereunder.

7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. Any lawsuit arising out of or
relating to this Agreement shall be brought exclusively in the federal or state
courts located in the State of Texas, and the Executive and the Company hereby
submit to personal jurisdiction in the State of Texas and to venue in such
courts.

7.5 Successors, Binding Agreement, Assignment. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as

 

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would apply if the Executive separated from service pursuant to Section 5.4
hereof, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
separation from service. As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid that executes and delivers the agreement provided for in this
section or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law. This Agreement shall inure to the benefit of and
be enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. Executive
may not delegate the performance of any of his duties hereunder. Neither party
hereto may assign any rights hereunder without the written consent of the other
party hereto.

7.6 Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original but both of which together shall constitute
one and the same instrument.

7.7 Headings. The headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

8. Arbitration. Except for disputes arising out of or pertaining to Section 4 of
this Agreement, any and all disputes arising out of or relating to this
Agreement or the breach, termination or validity thereof shall be settled by
arbitration before a sole arbitrator in accordance with the American Arbitration
Association’s then current National Rules of the Resolution of Employment
Disputes (the “AAA Rules”). The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. § 116, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The
arbitration shall be held

 

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in Atlanta, Georgia and, unless the parties agree otherwise, the arbitrator
shall be selected in accordance with the AAA Rules. In case of conflict, the
provision of this Section 9 shall prevail over the AAA Rules.

Either party may demand arbitration by sending to the other party by certified
mail a written notice of demand for arbitration, setting forth the matters to be
arbitrated. The arbitrator shall have the authority to award only compensatory
damages, and neither party shall be entitled to written or deposition discovery
from the other. The Company will pay the fees and expenses of the arbitrator,
and in the event the arbitrator renders a decision solely in the favor of
Executive, the Company will pay Executive’s reasonable attorneys’ fees, expert
witness fees, and other reasonable expenses. The arbitrator shall have no
authority to alter, amend or modify any of the terms and conditions of this
Agreement.

Before arbitrating the dispute, the parties, if they so agree, may endeavor to
settle the dispute by mediation under the AAA Rules. Unless otherwise agreed by
the parties, the mediator will be appointed by the American Arbitration
Association in accordance with the AAA Rules. If the mediation is not
successfully concluded within thirty (30) days, the dispute will proceed to
arbitration as set forth above.

Notwithstanding the pendency of any dispute or controversy concerning separation
from service or the effects thereof, the Company will continue to pay the
Executive his full compensation in effect immediately before any notice of
separation from service giving rise to the dispute was given and continue him as
a participant in all compensation, benefit and insurance plans in which he was
then participating, until an award has been entered by the arbitrator. Any
amounts paid hereunder shall be set off against or reduced by any other amounts
due under this Agreement.

 

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9. Legal Fees and Expenses. It is the intent of the Company that the Executive
not be required to incur the legal expenses associated with the negotiation and
ongoing interpretation of this Agreement. Accordingly, the Company irrevocably
authorizes the Executive from time to time to retain counsel of his choice, at
the expense of the Company, to represent the Executive in connection with the
negotiation and interpretation of this Agreement. Notwithstanding the above, the
Company shall not be responsible for Executive’s legal expenses associated with
litigation or arbitration regarding this Agreement except to the extent set
forth in Section 8.

10. Special Provisions Regarding Code Section 409A.

(a) General. This Agreement shall be interpreted and administered in a manner so
that any amount or benefit payable hereunder shall be paid or provided in a
manner that is either exempt from or compliant with the requirements
Section 409A of the Code and applicable Internal Revenue Service guidance and
Treasury Regulations issued thereunder (and any applicable transition relief
under Section 409A of the Code). Nevertheless, the tax treatment of the benefits
provided under the Agreement is not warranted or guaranteed. Neither the Company
nor its directors, officers, employees or advisers shall be held liable for any
taxes, interest, penalties or other monetary amounts owed by Executive as a
result of the application of Section 409A of the Code.

(b) Six-Month Delay in Certain Circumstances. Notwithstanding anything in this
Agreement to the contrary, if any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code
would otherwise be payable or distributable

 

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under this Agreement by reason of Executive’s separation from service during a
period in which he is a Specified Employee (as defined below), then, subject to
any permissible acceleration of payment by the Company under Treas. Reg.
Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes):

(i) the amount of such non-exempt deferred compensation that would otherwise be
payable during the six-month period immediately following Executive’s separation
from service will be accumulated through and paid or provided on the first
business day of the seventh month following Executive’s separation from service
(or, if Executive dies during such period, within 30 days after Executive’s
death) (in either case, the “Required Delay Period”); and

(ii) the normal payment or distribution schedule for any remaining payments or
distributions will resume at the end of the Required Delay Period.

For purposes of this Agreement, the term “Specified Employee” has the meaning
given such term in Code Section 409A and the final regulations thereunder:
provided, however, that the Company’s Specified Employees and its application of
the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in
accordance with rules adopted by the Board or a committee thereof, which shall
be applied consistently with respect to all nonqualified deferred compensation
arrangements of the Company, including this Agreement.

 

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(c) Treatment of Installment Payments. Each payment of termination benefits
under Section 5.4 of this Agreement, including, without limitation, each
installment payment and each payment or reimbursement of premiums for continued
medical, dental or life insurance coverage under Section 5.4, shall be
considered a separate payment, as described in Treas. Reg.
Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

(d) Timing of Release of Claims. Whenever in this Agreement the provision of
payment or benefit is conditioned on Executive’s execution and non-revocation of
a release of claims, such release, must be (i) presented by Company to Executive
within 14 days of termination of Executive’s employment and (ii) executed by
Executive, and all revocation periods shall have expired, within 60 days after
the date of termination of Executive’s employment, but the Company may elect to
commence payment at any time during such 60-day period.

(e) Timing of Reimbursements and In-kind Benefits. If Executive is entitled to
be paid or reimbursed for any taxable expenses under Sections 5.4, 6.1, 8 or 9,
and such payments or reimbursements are includible in Executive’s federal gross
taxable income, the amount of such expenses reimbursable in any one calendar
year shall not affect the amount reimbursable in any other calendar year, and
the reimbursement of an eligible expense must be made no later than December 31
of the year after the year in which the expense was incurred. Executive’s rights
to payment or reimbursement of expenses pursuant to Section 9 shall expire at
the end of the 20 years after the Effective Date. No right of Executive to
reimbursement of expenses under Sections 5.4, 6.1, 8 or 9 shall be subject to
liquidation or exchange for another benefit.

 

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11. Mandatory Reduction of Payments in Certain Events.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then, prior to the making of any Payment to Executive,
a calculation shall be made comparing (i) the net benefit to Executive of the
Payment after payment of the Excise Tax, to (ii) the net benefit to Executive if
the Payment had been limited to the extent necessary to avoid being subject to
the Excise Tax. If the amount calculated under (i) above is less than the amount
calculated under (ii) above, then the Payment shall be limited to the extent
necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). The
reduction of the Payments due hereunder, if applicable, shall be made in such a
manner as to maximize the economic present value of all Payments actually made
to Executive as of the date of the Change in Control using the discount rate
required by Section 280G(d)(4) of the Code.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

W. Christopher Wellborn By:  

/s/ W. Christopher Wellborn

Name:  

W. Christopher Wellborn

MOHAWK INDUSTRIES, INC. By:  

/s/ Jeffrey S. Lorberbaum

Name:  

Jeffrey S. Lorberbaum

Title:  

Chairman and Chief Executive Officer

 

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