<PAGE>

EXHIBIT 10.13


                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of November 22,
2000, by and between Dal-Tile International Inc., a Delaware corporation (the
"Company"), and Jacques R. Sardas (the "Executive").

         The Company is engaged in the business of the manufacture, distribution
and marketing of glazed and unglazed tile. The Company desires to employ the
Executive and the Executive desires to accept such employment on the terms and
conditions of this Agreement.

         The Executive has served as President and Chief Executive of the
Company since July 1, 1997 pursuant to an Employment Agreement dated as of June
13, 1997 and amended as of October 10, 1997, and as of July 17, 1998 (the "Prior
Employment Agreement"). The Company and the Executive desire to extend the term
of the Prior Employment Agreement and amend certain other of its provisions.

         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 hereby acknowledged, the Prior Employment Agreement is
hereby amended and restated as follows:

         1.       TERM OF EMPLOYMENT. The term of the Executive's employment
                  under this Agreement (the "Term") shall commence on July 1,
                  1997 and continue through and expire on December 31, 2004
                  unless earlier terminated as herein provided.

         2.       DUTIES OF EMPLOYMENT. The Executive hereby agrees for the Term
                  to render his exclusive services to the Company as (subject to
                  the last sentence of this Section 2) its President and Chief
                  Executive Officer and, in connection therewith, to perform
                  such duties commensurate with his office as he shall
                  reasonably be 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 vacations
                  and except for periods of illness or incapacity. When and if
                  requested to do so by the Board, the Executive shall serve as
                  a director of the Company and a director and 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 in the form attached hereto as
                  Exhibit A and as provided in the Company's Certificate of
                  Incorporation and By-Laws as in effect from time to time. From
                  and after January 1, 2004, with the prior written consent of
                  the Board, the Executive may resign from his position as
                  President and Chief Executive Officer of the Company; it being
                  understood that in such event (i) the Executive shall be
                  obligated at the request of the Board to serve as its Chairman
                  for the remainder of the Term, (ii) the Executive shall
                  continue to perform services exclusively for the Company for
                  the remainder of the Term as the Board shall direct consistent
                  with his position as Chairman, (iii) the Annual Salary and
                  Annual Bonus shall remain the same, unless the Board and the
                  Executive shall reasonably agree otherwise and (iv) such
                  resignation, and any circumstances directly or indirectly
                  related thereto, shall not constitute Good Reason (as defined
                  below).


                                     -1-
<PAGE>


         3.    COMPENSATION AND OTHER BENEFITS.

                  3.1      SALARY. Effective commencing December 1, 2000, as
                           compensation for all services to be rendered by the
                           Executive during the Term, the Company shall pay to
                           the Executive a salary at the annual rate of $700,000
                           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
                           for executives. Executive shall be eligible to
                           receive annual salary reviews and salary increases as
                           authorized by the Board.

                  3.2      ANNUAL 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 (the "Plan"), which Annual Bonus shall be
                           determined by the Compensation Committee of the Board
                           and which bonus shall be paid not later than 120 days
                           after the end of such fiscal year. The amount of the
                           bonus opportunity shall be 100% of the amount of the
                           Annual Salary upon attainment of the "target"
                           performance level. The minimum amount of Annual Bonus
                           to be paid to Executive shall be fifty percent (50%)
                           of Executive's Annual Salary, and the maximum amount
                           of Annual Bonus to be paid to Executive shall be two
                           hundred percent (200%) of Executive's Annual Salary,
                           unless otherwise mutually agreed to in writing by the
                           Executive and the Board.


                  3.3      STOCK OPTION AGREEMENT. The Company shall
                           simultaneously herewith grant Executive options (the
                           "Options") to purchase (i) 2,000,000 shares of Common
                           Stock at an exercise price of $12.63 per share and
                           (ii) 1,000,000 shares of Common Stock at an exercise
                           price of $13.89 per share, on the date hereof on the
                           terms and conditions set forth in the Option Plan and
                           Stock Option Agreements to be entered into (the
                           "Stock Option Agreements") in the forms attached
                           hereto. All stock options granted by the Company to
                           Executive prior to the date hereof shall remain in
                           full force and effect in accordance with their terms
                           and such options shall be referred to herein as the
                           "Existing Options."


                  3.4      PARTICIPATION IN EMPLOYEE BENEFIT PLANS. During the
                           Term, the Executive shall be permitted to participate
                           in any group life, hospitalization or 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.

         4.    COVENANTS AGAINST COMPETITION. In order to induce the Company
               to enter into the Prior Employment Agreement, the Existing
               Options, this Agreement, the Stock Option Agreements, and the


                                     -2-
<PAGE>

               Management Subscription Agreement between Executive and
               Company dated as of July 17, 1998 (the "Management Subscription
               Agreement"), the Executive hereby agrees as follows:

                  4.1      ACKNOWLEDGMENTS OF EXECUTIVE. The Executive
                           acknowledges that (i) the Company and any affiliates
                           or subsidiaries thereof that are currently existing
                           or are acquired or formed during the Restricted
                           Period, as hereinafter defined (collectively, the
                           "Companies"), are and will be engaged primarily in
                           the business of the manufacture, distribution and
                           marketing of glazed and unglazed tile (the "Company
                           Business"); (ii) his work for the Companies will give
                           him access to trade secrets of and confidential
                           information concerning the Companies, including,
                           without limitation, information concerning its
                           organization, business and affairs, organization and
                           operations, "know-how", customer lists, details of
                           client or consultant contracts, pricing policies,
                           financial information, operational methods, marketing
                           plans or strategies, business acquisition plans, new
                           personnel acquisition plans, technical processes,
                           projects of the Companies, financing projections,
                           budget information and procedures, marketing plans or
                           strategies, and research products (collectively, the
                           "Trade Secrets"); and (iii) the agreements and
                           covenants contained in this Section 4 are essential
                           to protect the Company Business and goodwill of the
                           Companies.

                  4.2      RESTRICTIONS ON COMPETITION. During the Term and
                           for a two-year period after the end of the Term
                           (the "Restricted Period") unless this Agreement is
                           terminated in accordance with the provisions of
                           Section 5.4, the Executive shall not in any place
                           where the Company Business is now or hereafter
                           conducted by any of the Companies while the
                           Executive is an employee, agent, officer, director
                           or shareholder of the Companies, directly or
                           indirectly (a) engage in the Company Business for
                           his own account; (b) enter the employ of, or
                           render any services to any person or entity
                           engaged in the Company Business; or (c) become
                           interested in any such person or entity in any
                           capacity, including, without limitation, as an
                           individual, partner, shareholder, officer,
                           director, principal, agent trustee or consultant;
                           provided, however, that the Executive may own,
                           directly or indirectly, solely as an investment,
                           securities of any entity traded on any national
                           securities exchange or registered pursuant to
                           Section 12(g) of the Securities Exchange Act of
                           1934 if the Executive is not a controlling person
                           of, or a member of a group which controls, such
                           entity and does not directly or indirectly, own 3%
                           or more of any class of securities of such entity.
                           The Company shall notify the Executive of any
                           additional entities which may hereafter become
                           "Companies" within the meaning of this Agreement.

                  4.3      CONFIDENTIAL INFORMATION, PERSONAL RELATIONSHIPS.
                           During the Restricted Period, the Executive shall
                           keep secret and retain in strictest confidence,
                           and shall not use for the benefit of himself or
                           others, all confidential matters and Trade Secrets
                           of the Companies, except in the ordinary course of
                           performance by the Executive of his obligations
                           hereunder.


                                     -3-
<PAGE>


                  4.4      PROPERTY OF THE COMPANIES. 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
                           other means, made or compiled by or on behalf of
                           the Executive, or made available to the Executive
                           relating to the Companies are and shall be the
                           Companies' property and shall be delivered to the
                           Companies upon the expiration of the Term unless
                           requested earlier by the Companies.

                  4.5      EMPLOYEES OF THE COMPANIES. The Executive
                           acknowledges that any attempt on the part of the
                           Executive to induce any employee of any of the
                           Companies to leave any of the Companies' employ,
                           would be harmful and damaging to the Companies.
                           During the Restricted Period, the Executive will
                           not without the prior agreement of the Companies,
                           in any way, directly or indirectly: (i) induce or
                           attempt to induce any employee to terminate
                           employment with the Companies; (ii) disrupt the
                           Companies' relationship with any employee; or
                           (iii) solicit or entice any person employed by the
                           Companies.

                  4.6      BUSINESS OPPORTUNITIES. The Executive acknowledges
                           that the Companies have been considering, and
                           during the Term may consider, the acquisition of
                           various entities engaged in the Company Business
                           and that it would be harmful and damaging to the
                           Companies if he were to become interested in any
                           such entity without the Company's prior consent.
                           During the Restricted Period, the Executive will
                           not without the Company's prior consent become
                           interested in any such entity in any capacity,
                           including, without limitation, as an individual,
                           partner, shareholder, officer, director, principal,
                           agent trustee or consultant, if the Executive was
                           aware at any time during the Term that the
                           Companies had been considering the acquisition of
                           such entity.

                  4.7      RESTRICTIVE COVENANTS. For the purposes of this
                           Agreement all matters discussed in Sections 4.1,
                           4.2, 4.3, 4.4, 4.5 and 4.6 of this Agreement shall
                           be referred to as the "Restrictive Covenants."

                  4.8      RIGHTS AND REMEDIES UPON BREACH. If the Executive
                           breaches, or threatens to commit a breach of, any
                           of the provisions of the Restrictive Covenants,
                           the Company shall have the following rights and
                           remedies with respect to the Executive, each of
                           which rights and remedies shall be independent of
                           the others and severally enforceable, and each of
                           which is in addition to, and not in lieu of, any
                           other rights and remedies available to the Company
                           under law or in equity.

                                    4.8.1    SPECIFIC PERFORMANCE. The right and
                                             remedy to have the Restrictive
                                             Covenants specifically enforced, it
                                             being agreed that any breach or
                                             threatened breach, of the
                                             Restrictive Covenants would cause
                                             irreparable injury to the Company
                                             and money damages will not provide
                                             an adequate remedy to the Company.


                                     -4-
<PAGE>

                                    4.8.2    ACCOUNTING. The right and remedy to
                                             require the Executive to account
                                             for and pay over to the Company all
                                             compensation, profits, monies,
                                             accruals, increments or other
                                             benefits derived or received by him
                                             as a result of any transactions
                                             constituting a breach of the
                                             Restrictive Covenants.

                                    4.8.3    SEVERABILITY OF COVENANTS. The
                                             Executive acknowledges and agrees
                                             that the Restrictive Covenants are
                                             reasonable and valid in
                                             geographical and moral scope and in
                                             all other respects. If any court
                                             determines that any of the
                                             Restrictive Covenants, or any part
                                             thereof, are invalid or
                                             unenforceable, the remainder of the
                                             Restrictive Covenants shall not
                                             thereby be affected and shall be
                                             given full effect without regard to
                                             the invalid portions.

                                    4.8.4    BLUE-PENCILLING. If it is
                                             determined that any of the
                                             Restrictive Covenants, or any part
                                             thereof, is unenforceable because
                                             of the duration or geographic scope
                                             of such provision, the duration or
                                             scope of such provision, as the
                                             case may be, shall be reduced so
                                             that such provisions becomes
                                             enforceable and, in its reduced
                                             form, such provision shall then be
                                             enforceable.

                  4.9      ENFORCEABILITY IN JURISDICTION. The Company and
                           the Executive intend to and hereby confer
                           jurisdiction to enforce the Restrictive Covenants
                           upon the courts of any jurisdiction within the
                           states or countries in which the Company does
                           business. If the courts of any one or more of such
                           jurisdictions hold the Restrictive Covenants
                           unenforceable by reason of the breadth of such
                           scope or otherwise, it is the intention of the
                           Company and the Executive that such determination
                           not bar or in any way affect the Company's right
                           to relief provided above in the courts of any
                           other jurisdiction within the geographical scope
                           of the Restrictive Covenants, as to breaches of
                           such Restrictive Covenants in such other
                           respective jurisdictions, such Restrictive
                           Covenants as they relate to each jurisdiction
                           being, for this purpose, severable into diverse
                           and independent covenants.

           5. TERMINATION.

                  5.1      TERMINATION UPON 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 a lump sum within 10
                           days of the termination), plus a portion of the
                           Executive's Annual Bonus, as set forth in Section
                           3.2, computed on a pro rata basis based on the
                           performance of the Company from the beginning of the
                           relevant bonus period to the date of Executive's
                           death (to be paid


                                     -5-
<PAGE>


                           as promptly as practicable, but no later than 10
                           days after the determination thereof), 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.

                  5.2      TERMINATION 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 sixty 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; provided, that the Executive shall
                           be entitled to receive any accrued and unpaid Annual
                           Salary through such effective date of termination (to
                           be paid in a lump sum within 10 days of the
                           termination), plus a portion of the Executive's
                           Annual Bonus, as set forth in Section 3.2, computed
                           on a pro rata basis based on the performance of the
                           Company from the beginning of the relevant bonus
                           period to the date of termination (to be paid as
                           promptly as practicable, but no later than 10 days
                           after the determination thereof; it being understood
                           that the Executive shall make the determination
                           whether the calculation and payment of the bonus
                           shall be made immediately after the effective date of
                           the termination or after the end of the fiscal year
                           of the termination), and any benefits to which the
                           Executive may be entitled under and in accordance
                           with the terms of any employee benefits plan or
                           program maintained by the Company.

                  5.3      TERMINATION 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 terminate
                           the Executive's employment under this 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
                           termination, any benefits vested as of the date of
                           such termination and any other compensation or
                           benefits otherwise required to be paid under
                           applicable law. Except for such payments, the Company
                           shall be under no further obligation to the
                           Executive. As used in this Section 5, the term
                           "Cause" shall mean (i) the conviction of or plea of
                           guilty by the Executive of any felony or other
                           serious crime involving the Company, or (ii) gross
                           negligence 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 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 terminate the Executive 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
                           terminate Executive's employment for Cause, such
                           notice to state in detail the particular acts or
                           failures to act which constitute grounds for the
                           termination. 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 within 15 days of the


                                     -6-
<PAGE>


                           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 terminate the Executive's
                           employment for Cause, the effective date of such
                           termination shall be as specified in the Notice.

                  5.4      TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The
                           Company shall have the right at any time during the
                           Term to terminate the Executive's employment
                           hereunder without Cause. Upon such a termination or
                           the termination by the Executive for Good Reason, the
                           Company's sole obligation hereunder, except as
                           otherwise provided in Section 3.4, shall be to pay to
                           the Executive (i) an amount equal to any Annual
                           Salary accrued and due and payable to the Executive
                           hereunder on the date of termination (to be paid in a
                           lump sum within 10 days of the termination), (ii)
                           thereafter all Annual Salary for the remainder of the
                           Term, to be paid in a lump sum within 10 days of the
                           termination, (iii) in a lump sum payment (to be paid
                           as promptly as practicable, but no later than 10 days
                           after the determination thereof; it being understood
                           that the Executive shall make the determination
                           whether the calculation and payment of the bonus
                           shall be made immediately after the effective date of
                           the termination or after the end of the fiscal year
                           of the termination), the greater of (A) a portion of
                           the Executive's Annual Bonus as set forth in Section
                           3.2 computed on a pro rated basis based on the
                           performance of the Company from the beginning of the
                           bonus period to the date of termination and (B) an
                           amount equal to the amount of the Annual Bonus for
                           the fiscal year preceding the fiscal year in which
                           the date of termination occurs, pro rated based on
                           the number of days elapsed in the year of
                           termination. For purposes of this Agreement, "Good
                           Reason" shall mean (i) a reduction in the Annual
                           Salary or bonus opportunity as specified in Section
                           3.1 or 3.2, (ii) a relocation of the Company's
                           headquarters or required relocation of the Executive
                           more than 100 miles outside of the Dallas/Fort Worth
                           Metropolitan area, (iii) a material diminution in the
                           Executive's duties or responsibilities, (iv) an
                           adverse change in the Executive's title, (v)
                           assignment to Executive of duties and
                           responsibilities that are inconsistent with his
                           position in any material respect or (vi) failure of
                           the Board to nominate Executive for election to the
                           Board, or removal of the Executive from the Board
                           without his consent.

                  5.5      TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In
                           the event Executive's employment is terminated in
                           connection with a Change of Control (as such term is
                           defined in a Change of Control Agreement between
                           Executive and Company dated as of October 1, 2000
                           (the "Change of Control Agreement")) under
                           circumstances pursuant to which Executive is entitled
                           to payments under the Change of Control Agreement,
                           Executive shall be entitled to such payments as are
                           provided under such agreement in lieu of the payments
                           provided in this Section 5. It is the intent of both
                           Company and Executive that this Agreement in no way
                           shall impair Executive's rights and obligations, and
                           Company's rights and obligations, under such Change
                           of Control Agreement. However, to the extent that
                           this Agreement and the Change of Control Agreement
                           shall conflict, it is the intent of the Company and
                           the Executive that such agreements shall be
                           interpreted


                                     -7-
<PAGE>


                           in a manner such that Executive receives the
                           greater of (i) the payment or benefit provided
                           under this Agreement or (ii) the payment or
                           benefit provided under the Change of Control
                           Agreement, but that in no event shall Executive be
                           entitled to receive payments or benefits under
                           both agreements to the extent such payments or
                           benefits are duplicative.

                  5.6      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 stock option rights as provided in
                           the Stock Option Agreements, the Existing Options,
                           and the Right (as defined below) as provided in the
                           SAR Agreement (as defined below) and except as
                           otherwise required by applicable law.

         6.    EXPENSES.

                  During the Term, the Executive will be reimbursed for his
                  reasonable professional and personal 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.
                  Such expenses shall include, but shall not be limited to,
                  travel, entertainment, club dues and promotional expenses
                  and transportation expenses. With respect to any expenses
                  that are to be reimbursed by the Company to the Executive,
                  the Executive shall be reimbursed upon his presenting to
                  the Company an itemized expense voucher.

           7.  OTHER 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:
                           Dal-Tile International Inc.
                           7834 Hawn Freeway
                           Dallas, TX 75217
                           Attention: Mark Solls, Esq.


                  (ii)     if to the Executive, to:     with a copy to:

                           Jacques R. Sardas            Ira C. Kaplan, Esq.
                           6031 Orchid Lane             Benesch, Friedlander,
                                                        Coplan & Aronoff, LLP


                                     -8-
<PAGE>


                           Dallas, TX 75230             2300 BP America Building
                                                        200 Public Square
                                                        Cleveland, Ohio 44114

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

                  7.2      ENTIRE AGREEMENT. This Agreement, the Management
                           Subscription Agreement, the SAR Agreement, the
                           Existing Options, and the Stock Option 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, including, without limitation, the Prior
                           Employment Agreement.

                  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 party 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 and
                           construed in accordance with the laws of the State of
                           Delaware applicable to agreements made and to be
                           performed entirely within such State.

                  7.5      ASSIGNMENT. 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.
                           Subject to the foregoing, this Agreement shall be
                           binding upon and shall inure to the benefit of the
                           parties hereto and their respective successors and
                           assigns.

                  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.

           Any and all disputes arising out of or relating to this Agreement or
the breach, termination or validity thereof shall be settled by arbitration
before a sole arbitrator in accordance with the then current CPR Rules for
Non-Administered Arbitration. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Section 116, and judgment upon the award rendered by
the arbitrator may be entered by any court having


                                     -9-
<PAGE>


jurisdiction thereof. The arbitration shall be held in Dallas, Texas and,
unless the parties agree otherwise, the arbitrator shall be selected from
CPR's panel of neutrals.

           Either party may demand arbitration by sending to the other party by
certified mail a written notice of demand for arbitration, setting forth the
matters to be arbitrated. The arbitrator shall have the authority to award only
compensatory damages, and neither party shall be entitled to written or
deposition discovery from the other. The Company will pay the fees and expenses
of the arbitrator, as well as any attorneys' fees, expert witness fees, and
other expenses to the extent provided in Section 18 hereof. The arbitrator shall
have no authority to alter, amend or modify any of the terms and conditions of
this Agreement.

           Before arbitrating the dispute, the parties, if they so agree, may
endeavor to settle the dispute by mediation under the then current CPR Mediation
Procedure. Unless otherwise agreed, the parties will select a mediator from the
CPR panel of neutrals. If the mediation is not successfully concluded within
thirty (30) days, the dispute will proceed to arbitration as set forth above.

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

           9.   STOCK OPTIONS, REGISTRATION.

                     (a) The Company agrees, upon the occurrence of a Filing
                     Event (as defined below), as promptly as practicable but
                     not later than 45 days after such occurrence, to (i) file
                     with the Securities and Exchange Commission (the "SEC"), at
                     the Company's cost and expense, a Registration Statement on
                     Form S-8, including an offer prospectus on Form S-3 (or
                     similar form) with respect to the shares of Common Stock
                     issuable upon exercise of the Options, the Existing
                     Options, and (to the extent not previously exercised) the
                     Right (as defined in the Stock Appreciation Rights
                     Agreement dated as of February 20, 1998, between the
                     Company and Executive (the "SAR Agreement")), (ii) maintain
                     the effectiveness of such Registration Statement (subject
                     to the other provisions of this Section 9) until all of the
                     Options, the Existing Options and the Right shall have been
                     exercised in full or shall have expired, whichever shall
                     first occur, and (iii) provide to Executive copies of the
                     Registration Statement and all amendments, if any, thereto.
                     The Company further agrees to cause any Registration
                     Statement on Form S-8 filed by the Company on behalf of its
                     other employees to cover the Options, the Existing Options
                     and the Right held by the Executive.

                     (b) (i) If the Company proposes to effect an underwritten
                     secondary registration on behalf of DTI Investors LLC or
                     its members, the Company will provide prompt notice to the
                     Executive thereof and will permit the Executive to include
                     in such registration shares of Common Stock owned by him
                     (including shares acquired or to be acquired pursuant to
                     the exercise of options by him) with respect to which the
                     Company has received written request for inclusion therein
                     within 20 days after the receipt of the Company's notice.
                     Common Stock requested by the Executive to be included in
                     such registration will be included pro rata on the basis of
                     the number of shares of Common Stock held by the Executive
                     and the other


                                     -10-
<PAGE>


                     participants in such registration, subject to reduction,
                     if necessary, if the managing underwriter for the offering
                     advises the Company that such reduction is advisable in
                     order to avoid an adverse effect on the proposed offering;
                     provided, however, Executive shall have priority as to
                     500,000 of his shares of Common Stock.

                                  (ii) Subject to receipt of requisite third
                     party consents, at any time during the period commencing
                     January 31, 2005 and ending December 31, 2006, Executive
                     shall have the right to make one or more requests for
                     registration on Form S-3 of shares of Common Stock owned by
                     him (including shares acquired pursuant to the exercise of
                     options by him), provided that such request shall not be
                     effective unless the Common Stock subject thereto has an
                     estimated market value of at least $15,000,000. The Company
                     will not be obligated to effect any such registration
                     within six months after the effective date of any
                     previously filed registration statement of the Company, and
                     the Company shall have the right to postpone any requested
                     registration for up to six months if it determines in good
                     faith that such registration could reasonably be expected
                     to have an adverse effect on any Proposal or plan by the
                     Company or its subsidiaries to engage in any acquisition,
                     merger, disposition or other material corporate
                     transaction. Executive shall have the right to select the
                     managing underwriters to administer the registered public
                     offering requested pursuant hereto, who shall be of
                     national prominence and reasonably acceptable to the
                     Company. Upon any request pursuant hereto, the Company will
                     use all reasonable efforts to effect the registration and
                     the sale of the Common Stock subject thereto as promptly as
                     practicable. Executive acknowledges that any registration
                     requested pursuant hereto will be subject to any "piggy
                     back" registration rights in effect at the time of the
                     Executive's request, provided, however, that (a) the
                     Executive shall not be obligated to reduce his
                     participation in such registration below 2 million shares
                     of Common stock as a result of a pro-rata reduction, and
                     (b) the Executive shall have the right to make one or more
                     additional requests for registration (on the same terms and
                     conditions provided for in this subparagraph (ii), except
                     that the $15 million minimum referred to above shall be $10
                     million) if shares of Common Stock owned by him were
                     excluded from registration as a result of "piggy back"
                     registration rights of others exercised by others. Except
                     as otherwise set forth above, no such "piggy back"
                     registration rights shall have priority over those granted
                     to the Executive pursuant to this subparagraph (ii).

                                  (iii) The Company shall bear all expenses in
                     connection with the registrations provided for herein
                     (other than underwriting discounts and commissions and
                     transfer taxes, if any) and fees and expenses of the
                     Executive's legal and other advisers, attributable to the
                     inclusion in any such registration of Common Stock owned by
                     Executive.

                     (c) The obligations of the Company contained in this
                     Section 9 are subject to (i) requirements of applicable
                     law, (ii) restrictions that may be imposed by the Company's
                     underwriters, and (iii) Executive cooperating and providing
                     any needed consents, agreements (including any required
                     "lock up" or customary indemnity agreements, to the extent
                     such arrangements are requested of members of Company
                     management or significant shareholders, generally) and
                     information. Executive agrees that he will discontinue any
                     (i) exercise of the Options, the Existing Options, or the
                     Rights or (ii) sale of shares of Common Stock upon notice
                     from the Company that an event or development makes
                     amendment or supplement of any Registration Statement of
                     the Company covering shares of Common Stock owned by the
                     Executive (or suspension of effectiveness thereof)
                     necessary, and will not resume such exercise


                                     -11-
<PAGE>

                     or sale until the Company informs Executive he may do so
                     (provided that the Company shall not require such
                     discontinuance for more than 90 days in any 360-day
                     period). Executive specifically agrees that, in
                     connection with a Filing Event described in clause (i)
                     of the definition thereof, he will not sell, transfer or
                     otherwise dispose of any shares of Common Stock, for a
                     period of 180 days following such event, unless the
                     underwriters for the relevant public offering determine
                     a shorter period to be appropriate.

                     (d) For the purpose of this Section 9, "Filing Event" shall
                     mean the earliest to occur of the following events: (i) the
                     sale in a registered public offering of at least 10% of the
                     shares of Common Stock held at such time by DTI Investors
                     LLC or its members (taken as a group); and (ii) the date of
                     the termination of the Executive's employment (A) by the
                     Company without Cause or by reason of disability or by the
                     Executive for Good Reason, (B) as a result of the
                     expiration of the Term of this Agreement (December 31,
                     2004), (C) by reason of the Executive's death, or (D)
                     subsequent to a Change of Control (as such term is defined
                     in the Change of Control Agreement).

                     (e) Company agrees, at the reasonable request of Executive
                     and at the sole cost of Company, to assist Executive in
                     determining a strategy for the sale of Common Stock
                     acquired by Executive, whether acquired pursuant to the
                     Options, the Existing Options, the Rights or otherwise,
                     provided that such strategy shall be designed to maximize
                     the economic and business benefits for both Company and
                     Executive.

                     (f) Company agrees that the Options granted pursuant to
                     Section 3.3 of this Agreement, as well as any stock options
                     granted to him in the future by the Company, shall (to the
                     extent permitted by law) be transferable by Executive
                     without restriction, provided that Executive shall be
                     required to notify Company (and inform Company of the terms
                     of such transfer and the identity of the transferee of such
                     options) at least five (5) business days prior to such
                     transfer.

                     (g) Company and Executive agree that this Agreement hereby
                     incorporates the terms of that certain letter, dated August
                     5, 1999, from the Company to DTI Investors LLC (the "Letter
                     Agreement"), which Letter Agreement has been previously
                     provided to Executive. To the extent that the terms and
                     provisions of the Letter Agreement and this Agreement are
                     inconsistent, the terms and provisions of the Letter
                     Agreement shall prevail.


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

                                         DAL-TILE INTERNATIONAL INC.

--------------------------               By:
JACQUES R. SARDAS                           ---------------------------------
                                         Name:
                                              -------------------------------
                                         Title:
                                               ------------------------------



                                     -12-