EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
the Effective Date (as defined herein) by and between U.S. Concrete, Inc., a
Delaware corporation (the "Company"), and Xxxx X. Xxxxxxxx (the "Employee").
PRELIMINARY STATEMENT
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company without distraction or
concern over minimum compensation, benefits or tenure, to develop and implement
the Company's initial development plan and thereafter to assist in the
management of the Company's future growth and development and the maximization
of the returns to the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
Section 1. CERTAIN DEFINED TERMS. (a) The following terms this
Agreement uses have the respective meanings this Section 1(a) assigns to them:
"Acquired Business" means Bay Cities Building Materials Co., Inc.
"Active Status" means the Employee's Employment status from the
Effective Date to and including the first to occur of (i) the Part-time
Employment Effective Date or (ii) the Termination Date.
"Annual Cash Compensation" of the Employee for any Compensation Year
means the salary the Employee earns during that Compensation Year,
including all amounts of salary the Employee earns during that
Compensation Year and elects to (i) defer, whether pursuant to a
Compensation Plan intended to qualify as a plan under Code Section 401(k)
or otherwise, and (ii) forego pursuant to a Compensation Plan under which
the Employee may receive Common Stock or any other form of noncash
compensation in lieu of that salary. For purposes of this definition, any
form of noncash compensation will be valued at its fair market value at
the time that compensation is awarded, earned or paid, as the case may be.
"Average Annual Cash Compensation" of the Employee means, as of the
Part-time Employment Effective Date, the average of (i) the Annual Cash
Compensation the Employee has earned in each of the two Compensation Years
next preceding that date or, if less than
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two Compensation Years have occurred prior to that date and since the
Effective Date, (ii) the Annual Cash Compensation in each whole
Compensation Year, if any, and, restated on an annualized basis, the
Annual Cash Compensation in each partial Compensation Year (up to a
maximum of two partial Compensation Years) next preceding the Part-time
Employment Effective Date.
"Base Salary" means: (i) prior to the Part-time Employment Effective
Date, the guaranteed minimum annual salary payable by the Company to the
Employee pursuant to Section 4(a); and (ii) on and after the Part-time
Employment Effective Date, the guaranteed minimum annual salary payable by
the Company to the Employee pursuant to Section 5(e).
"Board" means the entire Board of Directors of the Company.
"Business Reason" for the Company's termination of the Employee's
Employment means any lawful reason other than Cause.
"Cause" for the Company's termination of the Employee's Employment
means: (i) the Employee's conviction of a felony crime (or the Employee's
entering of a plea of NOLO CONTENDERE to any charge against him of a
felony crime) of any kind; or (ii) the Employee's continuing failure to
substantially perform his duties and responsibilities hereunder (except by
reason of the Employee's incapacity attributable to physical or mental
illness or injury) for a period of 20 days after the Required Board
Majority has delivered to the Employee a written demand for substantial
performance hereunder which specifically identifies the bases for the
Required Board Majority's determination that the Employee has not
substantially performed his duties and responsibilities hereunder (that
period being the "Grace Period"); provided, that for purposes of this
clause (ii), the Company will not have Cause to terminate the Employee's
Employment unless (A) at a meeting of the Board called and held following
the Grace Period in the city in which the Company's principal executive
offices are located of which the Employee was given not less than 10 days'
prior written notice and at which the Employee was afforded the
opportunity to be represented by counsel, appear and be heard, the
Required Board Majority adopts a written resolution which (1) sets forth
the Required Board Majority's determination that the failure of the
Employee to substantially perform his duties and responsibilities
hereunder has (except by reason of his incapacity attributable to physical
or mental illness or injury) continued past the Grace Period and (2)
specifically identifies the bases for that determination and (B) the
Company, at the written direction of the Required Board Majority, delivers
to the Employee a Notice of Termination for Cause to which a copy of that
resolution, certified as being true and correct by the secretary or any
assistant secretary of the Company, is attached. Cause of the type
referred to in clause (i) of the preceding sentence is a "Type I Cause,"
while Cause of the type referred to in clause (ii) of the preceding
sentence is a "Type II Cause."
"Code" means the Internal Revenue Code of 1986.
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"Common Stock" means the common stock of the Company.
"Company" means (i) U.S. Concrete, Inc., a Delaware corporation, and
(ii) any Person that assumes the obligations of "the Company" hereunder,
by operation of law, pursuant to Section 9(c)(iii) or otherwise.
"Compensation Plan" means any compensation arrangement, plan,
policy, practice or program the Company or any subsidiary of the Company
establishes, maintains or sponsors, or to which the Company or any
subsidiary of the Company contributes, on behalf of two or more Executive
Officers (including, for this purpose, any member of the family of any
Executive Officer), (i) including (A) any "employee pension benefit plan"
(as defined in ERISA Section 3(2)) or other "employee benefit plan" (as
defined in ERISA Section 3(3)), (B) any other retirement or savings plan,
including any supplemental benefit arrangement relating to any plan
intended to be qualified under Code Section 401(a) or whose benefits the
Code or ERISA limits, (C) any "employee welfare plan" (as defined in ERISA
Section 3(1)), (D) any arrangement, plan, policy, practice or program
providing for severance pay, deferred compensation or insurance benefit
and (E) any Incentive Plan, but (ii) excluding any compensation
arrangement, plan, policy, practice or program to the extent it provides
for annual base salary.
"Compensation Committee" means the committee of the Board to which
the Board has delegated duties respecting the compensation of Executive
Officers and the administration of Incentive Plans, if any, intended to
qualify for the Rule 16b-3 exemption under the Securities Exchange Act of
1934.
"Compensation Year" means a calendar year.
"Confidential Information" means, with respect to the Company or any
subsidiary of the Company, all trade secrets and other confidential,
nonpublic and/or proprietary information of that Person, including
information derived from reports, investigations, research, work in
progress, codes, marketing and sales programs, customer lists, records of
customer service requirements, capital expenditure projects, cost
summaries, pricing formulae, contract analyses, financial information,
projections, present and future business plans, confidential filings with
any governmental authority and all other confidential, nonpublic concepts,
methods of doing business, ideas, materials or information prepared or
performed for, by or on behalf of that Person.
"CPI" means for any period the Consumer Price Index for All Urban
Consumers, All Items, 1982-84 = 100, U.S. City Average, as published by
the United States Department of Labor, Bureau of Labor Statistics (or its
successor) for that period.
"Disability" of the Employee means the Employee has been determined
(which determination will be final and binding on all Persons, absent
manifest error), as a result of
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a physical or mental illness or personal injury he has incurred (including
illness or injury resulting from any substance abuse), by a Qualified
Physician (who may be the doctor treating or otherwise acting as the
Employee's doctor in connection with the illness or injury in question)
selected by the Employee, or by the Company at its expense, to be unable
to perform, at the time of that determination and, in all reasonable
medical likelihood, indefinitely thereafter, the normal duties then most
recently assigned, under and in accordance with the terms hereof, to the
Employee while on Active Status; provided that the determination whether
the Employee has incurred a Disability will be made by a majority of three
Qualified Physicians, (i) one of whom the Employee selects, (ii) one of
whom the Company selects and (iii) the remaining one of whom the Qualified
Physicians the Employee and the Company have selected pursuant to clauses
(i) and (ii) of this proviso select and the fees and expenses of whom the
Employee and the Company will share and pay in equal amounts, if: (A) the
Employee has selected a Qualified Physician and the Company has selected
another Qualified Physician, in each case to determine whether the
Employee has incurred a Disability, and (B) those Qualified Physicians
disagree as to whether the Employee has incurred a Disability. For
purposes of this definition, if the Employee is unable by reason of
illness or injury to give an informed consent to the performance of the
treatment of that illness or injury, a Qualified Physician selected by any
Person who is authorized by applicable law to give that consent will be
deemed to have been selected by the Employee. Notwithstanding the
foregoing, if the Company maintains a disability insurance policy that
provides coverage for its Executive Officers generally, the term
"Disability," as used in this Agreement, shall mean the events and/or
circumstances under which the Employee will be entitled to receive
disability benefits under that insurance policy.
"Effective Date" has the meaning Section 9(l) specifies.
"Employment" means the salaried employment of the Employee by the
Company or a subsidiary of the Company hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Executive Officer" means any of the chairman of the board, the
chief executive officer, the chief operating officer, the chief financial
officer, the president or any executive, regional or other group or senior
vice president of the Company.
"Good Reason" for the Employee's termination of his Employment
means: (i) any violation hereof in any material respect by the Company;
(ii) either (A) a failure of the Company to continue in effect any
Compensation Plan in which the Employee was participating or (B) the
taking of any action by the Company which would adversely affect the
Employee's participation in or materially reduce the Employee's benefits
under any such Compensation Plan, unless (1) in the case of either
subclause (A) or (B) of this clause, there is substituted a comparable
Compensation Plan that is at least economically equivalent, in terms of
the benefit offered to the Employee, to the Compensation Plan being ended
or in
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which the Employee's participation is being adversely affected or the
Employee's benefits are being materially reduced or (2) in the case of
that subclause (A), the failure, or in the case of that subclause (B), the
taking of action, adversely affects Executive Officers generally; or (iii)
the assignment to the Employee without the Employee's written consent of
duties inconsistent in any material respect with the Employee's then
current positions, authority, duties or responsibilities or any other
action by the Company which results in a material diminution in those
positions, authority, duties or responsibilities; provided, however, that
if the Company combines the operations of the Acquired Business with the
operations of one or more subsidiaries of the Company (whether through the
creation of an unincorporated or other division, by merger or
consolidation or otherwise), no resulting change in the status, offices,
titles or reporting requirements of the Employee will constitute "Good
Reason."
"Incentive Plan" means any compensation arrangement, plan, policy,
practice or program the Company or any subsidiary of the Company
establishes, maintains or sponsors, or to which the Company or any
subsidiary of the Company contributes, on behalf of at least two Executive
Officers and which provides for incentive, bonus or other
performance-based awards of cash, securities or the phantom equivalent of
securities, including any stock option, stock appreciation right and
restricted stock plan, but excluding any plan intended to qualify as a
plan under any one or more of Code Sections 401(a), 401(k) or 423.
"IPO" means the first time a registration statement the Company has
filed under the Securities Act of 1933, as amended (the "Securities Act")
and respecting a primary underwritten offering by the Company to the
public of shares of Common Stock becomes effective under the Securities
Act and the Company issues and sells any of the shares registered by that
registration statement to the Underwriter.
"IPO Closing Date" means the date on which the Company first
receives payment for the shares of Common Stock it sells to the
Underwriter in the IPO.
"Nonterminating Party" means the Employee or the Company, as the
case may be, to which the Terminating Party delivers a Notice of
Termination.
"Notice of Termination" to or from the Employee means a written
notice that: (i) states that it is a "Notice of Termination" hereunder,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances the Terminating Party claims to provide a basis for
termination of the Employee's Employment, and if the Termination Date is
other than the date of receipt of the notice, (iii) sets forth that
Termination Date.
"Part-time Employment Effective Date" means, (i) if the Company
elects pursuant to any applicable provision hereof to terminate the
Employee's Employment other than for Cause or (ii) if the Employee elects
pursuant to the applicable provision hereof to terminate his Employment
for Good Reason or by reason of his Disability, the date the
Nonterminating Party receives the Terminating Party's Notice of
Termination.
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"Part-time Employment Period" means the period of time which begins
on the Part- time Employment Effective Date and ends on the first to occur
of (i) the third anniversary of the Effective Date or, if later, the first
anniversary of the Part-time Employment Effective Date, (ii) the
termination by the Company of the Employee's Employment for Type I Cause
or (iii) the death of the Employee.
"Person" means any natural person, sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association,
mutual company, joint stock company, joint venture, estate, trust, union
or employee organization or governmental authority.
"Qualified Physician" means, in the case of any determination
whether the Employee has sustained a Disability, a physician (i) holding
an M.D. degree from a medical school located in the United States, (ii)
specializing and board-certified in the treatment of the injury or illness
that has or may have caused that Disability and (iii) having admission
privileges to one or more hospitals located in the state in which the
Company then has its principal executive offices or in the state in which
the Employee then is domiciled.
"Required Board Majority" means at any time a majority of the
members of the Board at that time.
"Retirement" means termination of the Employee's Employment by
reason of the Employee's giving a Notice of Termination on or following
the date he has attained age 65.
"Terminating Party" means the Employee or the Company, as the case
may be, who or which terminates the Employee's Employment by means of a
Notice of Termination.
"Termination Date" means: (i) if the Employee's Employment
terminates by reason of the Employee's death, the date of that death; (ii)
if the Employee's Employment terminates by reason of the Employee's giving
a Notice of Termination Without Good Reason or by reason of Retirement,
the elapse of the 30th day after the Company receives that notice; (iii)
if the Company terminates the Employee's Employment (A) at any time for
Type I Cause or (B) at any time prior to the Part-time Employment
Effective Date for Type II Cause, the date the Employee receives the
Company's Notice of Termination for Cause; and (iv) if the Employee's
Employment terminates for any other reason, at the expiration of the
Part-time Employment Period.
"Type I Cause" means Cause of the type to which clause (i) of the
first sentence of the definition of Cause herein refers.
"Type II Cause" means Cause of the type to which clause (ii) of the
first sentence of the definition of Cause herein refers.
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"Underwriter" means collectively (i) the investment banking firms
that prospectively may enter into the underwriting agreement and (ii) from
and after the IPO pricing date, the investment banking firms parties to
the underwriting agreement.
"Without Good Reason" for the Employee's termination of his
Employment means that, at the time the Company receives the Employee's
Notice of Termination, the Employee was not entitled to terminate his
Employment (i) for a Good Reason or (ii) by reason of his Disability or
Retirement.
(b) OTHER DEFINITIONAL PROVISIONS. (i) Except as this Agreement
otherwise may specify, all references herein to any statute, including the Code
and ERISA, are references to that statute or any successor statute, as the same
may have been or be amended or supplemented from time to time, and any rules or
regulations promulgated thereunder, and all references herein to any rule or
regulation are references to that rule or regulation, or any successor rule or
regulation, as the same may be amended or supplemented from time to time.
(ii) This Agreement uses the words "herein," "hereof" and
"hereunder" and words of similar import to refer to this Agreement as a whole
and not to any provision of this Agreement, and the word "Section" refers to a
Section of this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number includes
the plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(iv) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding that word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
Section 2. EMPLOYMENT. (a) On the terms and subject to the
conditions hereinafter set forth, and beginning as of the Effective Date and
continuing until the first to occur of the Part-time Employment Effective Date
or the Termination Date, (i) the Company will employ the Employee as Executive
Vice President of Business Development - Bay Area, (ii) the Employee will serve
in the Company's employ in that position and (iii) the Employee will perform
such duties, and have such powers, authority, functions, duties and
responsibilities for the Company and entities affiliated with the Company as are
commensurate and consistent with his employment in the position or positions to
which clause (i) of this sentence refers. The Employee also will have such
additional powers, authority, functions, duties and responsibilities as the
chief executive officer of the Company or his delegate may assign to him from
time to time; provided that, without the Employee's written consent, those
additional powers, authority, functions, duties and responsibilities must not be
inconsistent or interfere with, or detract from, those herein vested in, or
otherwise then being performed for the Company by, the Employee.
(b) The Employee will not, at any time during his Employment, engage
in any other activities unless those activities do not interfere materially with
the Employee's duties and
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responsibilities to the Company at that time, except that the Employee will be
entitled, subject to the provisions of Section 7, (i) to continue with such
activities as the Employee has carried on prior to the Effective Date, including
making and managing his personal investments and participating in other business
or civic activities and (ii) to serve on corporate or other business, civic or
charitable boards or committees and trade association or similar boards or
committees.
Section 3. TERM OF EMPLOYMENT. Subject to the provisions of Section
5, the term of the Employee's Employment will be for an initial term of three
years, provided that, beginning on the second anniversary of the Effective Date,
the term of the Employee's Employment will be for a continually renewing term of
one year commencing on that anniversary date and renewing each day thereafter
for an additional day without any further action by either the Company or the
Employee until an event has occurred as described in, or one of the parties has
made an appropriate election pursuant to, Section 5. After the Termination Date
has occurred and the Company has paid to the Employee all the applicable amounts
Section 5 provides the Company will pay as a result of the termination of the
Employee's Employment, including all amounts accruing during the Part-time
Employment Period, if any, this Agreement will terminate and have no further
force or effect, except that Sections 8, 9 and 10 will survive that termination
indefinitely and Section 7 will survive for the period of time it specifies.
Section 4. COMPENSATION. (a) BASE SALARY. A Base Salary will be
payable to the Employee by the Company as a guaranteed minimum annual amount
hereunder for each Compensation Year during the period from the Effective Date
to the first to occur of the Part-time Employment Effective Date or the
Termination Date. The Company will pay that Base Salary in the intervals
consistent with its normal payroll schedules, and that Base Salary will be
payable initially at the annual rate of $200,000 and will be increased (but not
decreased or adjusted other than as Section 5 provides) as follows:
(i) on the first and each subsequent anniversary of the Effective
Date, by the amount equal to the product of (A) the annual rate of that
Base Salary as in effect immediately prior to that anniversary multiplied
by (B) the percentage increase (if any) in the CPI for the 12-month period
immediately preceding that anniversary; and
(ii) on the first and each subsequent anniversary of the Effective
Date or at any other time, by such additional amount (if any) the
Compensation Committee in its sole discretion may determine or approve, as
evidenced by the written minutes or records of the Compensation Committee
and its written notices of those determinations or approvals to the
Employee.
Effective as of the Part-time Employment Effective Date, the Base Salary
theretofore in effect will be adjusted as Section 5(e) provides.
(b) OTHER COMPENSATION. The Employee will be entitled to participate
in all Compensation Plans from time to time in effect while he remains on Active
Status, regardless of
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whether the Employee is an Executive Officer. All awards to the Employee under
all Incentive Plans will take into account the Employee's positions with and
duties and responsibilities to the Company and its subsidiaries.
Section 5. TERMINATION OF EMPLOYMENT AND ITS CONSEQUENCES. (A)
TERMINATION BY THE COMPANY. (i) The Company will be entitled, if acting at the
direction of the Required Board Majority, to terminate the Employee's Employment
(A) at any time for Type I Cause or (B) at any time prior to the Part-time
Employment Effective Date for (1) Type II Cause or (2) any Business Reason. The
Company's termination of the Employee's Employment for Cause will be effective
on the date the Company delivers a Notice of Termination for Cause to the
Employee pursuant to this Section 5(a)(i) (together, in the case of a
termination for Type II Cause, with the certified resolution to which clause
(ii) of the definition herein of Cause refers), while the Company's termination
of the Employee's Employment for a Business Reason will be effective on the
later of (A) the third anniversary of the Effective Date and (B) first
anniversary of the date the Company delivers a Notice of Termination for a
Business Reason to the Employee pursuant to this Section 5(a)(i).
(ii) If the Company terminates the Employee's Employment for Cause,
the Company promptly thereafter, and in any event within five business days
thereafter, will pay the Employee his Base Salary to and including the
Termination Date and the amount of all compensation the Employee has previously
deferred (together with any accrued interest or earnings thereon), in each case
to the extent not theretofore paid, and, when that payment is made, the Company
will, notwithstanding Section 3, have no further or other obligations hereunder
to the Employee.
(iii) If the Company terminates the Employee's Employment for a
Business Reason, the respective rights and obligations of the Company and the
Employee during the Part-time Employment Period will be as Section 5(e) sets
forth.
(b) TERMINATION BY THE EMPLOYEE. (i) The Employee will be entitled
to terminate his Employment (A) for a Good Reason at any time within 180 days
after the facts or circumstances constituting that Good Reason first exist and
are known to the Employee, (B) Without Good Reason at any time or (C) by reason
of his Retirement. The Employee's termination of his Employment for Good Reason
will be effective on the later of (A) the third anniversary of the Effective
Date and (B) the first anniversary of the date the Employee delivers a Notice of
Termination for Good Reason to the Company. The Employee's termination of his
Employment Without Good Reason or by reason of his Retirement will be effective
on the 30th day following the Employee's delivery of a Notice of Termination
Without Good Reason or by reason of his Retirement.
(ii) If the Employee terminates his Employment for Good Reason, the
respective rights and obligations of the Company and the Employee during the
Part-time Employment Period will be as Section 5(e) sets forth.
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(iii) If the Employee terminates his Employment Without Good Reason
or by reason of his Retirement, the Company will pay to the Employee, in a cash
lump sum within 10 business days after the Termination Date, the amount equal to
the sum of (A) the portion of the Base Salary to and including the Termination
Date which has not yet been paid, (B) all compensation the Employee has
previously deferred (together with any accrued interest and earnings thereon)
which has not yet been paid and (C) any accrued but unpaid vacation pay.
(c) TERMINATION BY REASON OF DISABILITY. If the Employee incurs any
Disability while on Active Status, either the Employee or the Company may
terminate the Employee's Employment effective on the first anniversary of the
date the Nonterminating Party receives a Notice of Termination from the
Terminating Party pursuant to this Section 5(c). If the Employee's Employment
terminates by reason of the Employee's Disability, the respective rights and
obligations of the Company and the Employee during the Part-time Employment
Period will be as Section 5(e) sets forth.
(d) TERMINATION OF EMPLOYMENT BY DEATH. The Employee's Employment
will terminate automatically at the time of his death. If the Employee's
Employment terminates by reason of the Employee's death, the Company will pay to
the Person the Employee has designated in a written notice delivered to the
Company as his beneficiary entitled to that payment, if any, or to the
Employee's estate, as applicable, in a cash lump sum within 30 days after the
Termination Date, the amount equal to the sum of (i) the portion of the Base
Salary through the end of the month in which the Termination Date occurs which
has not yet been paid, (ii) all compensation the Employee has previously
deferred (together with any accrued interest or earnings thereon) which has not
yet been paid, (iii) any accrued but unpaid vacation pay (if the Employee dies
while on Active Status) and (iv) (A) if the Employee dies while on Active Status
or during the Part-time Employment Period (other than during the last 12 months
of the Part-time Employment Period), an amount equal to the Base Salary being
paid for the Compensation Year in which he dies or (B) if the Employee dies
during the last 12 months of the Part-time Employment Period, the product of (1)
one-twelfth of the Base Salary being paid for the Compensation Year in which the
Employee dies multiplied by (2) the number of whole and partial calendar months
in the period beginning with the first calendar month after the calendar month
in which he dies and ending with the last calendar month in which the
Termination Date would have occurred if the Employee's Employment were to have
continued to the end of the Part-time Employment Period. For purposes of this
Section 5(d), if the anniversary of the Effective Date in the Compensation Year
in which the Employee dies has not occurred on or before the Termination Date,
the Base Salary for that Compensation Year will be calculated on the assumption
that no increase in the amount thereof would be made effective as of that
anniversary pursuant to Section 4(a) or 5(e)(i), as applicable.
(e) EMPLOYEE'S RIGHTS DURING THE PART-TIME EMPLOYMENT PERIOD. (i)
The Company will pay the Employee a Base Salary, in the intervals consistent
with its normal payroll schedules, during the Part-time Employment Period in the
amounts determined from time to time as follows: Effective as of the Part-time
Employment Effective Date, the Base Salary payable by the Company to the
Employee for the Part-time Employment Period will be as follows:
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(A) (1) if the Part-time Employment Effective Date occurs as a
result of the receipt by the Nonterminating Party of a Notice of
Termination for a Business Reason or a Notice of Termination for Good
Reason, the amount equal to the Average Annual Cash Compensation of the
Employee determined as of the Part-time Employment Effective Date; and (2)
if the Part-time Employment Effective Date occurs as a result of the
receipt by the Nonterminating Party of a Notice of Termination for
Disability, the amount equal to the amount by which (a) the Average Annual
Cash Compensation of the Employee determined as of the Part-time
Employment Effective Date exceeds (b) the aggregate amount of periodic
payments the Employee receives during the 12 months beginning on that date
under Compensation Plans then in effect and providing for those payments
to the Employee solely as a result or on account of disability; and
(B) on each anniversary of the Effective Date which occurs during
the Part-time Employment Period, if any, the Base Salary payable pursuant
to this Section 5(e) will be increased by the amount equal to the product
of (1) the annual rate of that Base Salary as in effect immediately prior
to that anniversary multiplied by (2) the percentage increase (if any) in
the CPI for the 12-month period immediately preceding that anniversary.
(ii) The Employee will continue to participate in all Compensation
Plans from time to time in effect during the Part-time Employment Period,
provided, however, that: (A) the Employee will not be entitled to receive any
new award or grant under any Incentive Plan, and any such new award or grant
will be at the sole discretion of the Compensation Committee or the Board, as
applicable, with respect to that Incentive Plan; and (B) if (1) the terms of any
such plan preclude the Employee's continued participation therein or (2) his
continued participation in any such plan would or reasonably could be expected
to disqualify that plan under the Code, the Employee will not be entitled to
participate in that plan, but the Company instead will provide the Employee with
the after-tax equivalent of the benefits that would have been provided to the
Employee were he a participant in that plan. For purposes of determining
eligibility (including years of service) for retirement benefits payable under
any Compensation Plan, the Employee will be deemed to have retired at the
Termination Date.
(iii) Subject to the provisions of Section 7, the Employee will not
be (A) prevented from accepting other employment or engaging in (and devoting
substantially all his time to) other business activities or (B) required to
perform any regular duties for the Company (except to provide such services
consistent with the Employee's educational background, experience and prior
positions with the Company as may be acceptable to the Employee) or to seek or
accept additional employment with any other Person. If the Employee, at his
discretion, accepts any such additional employment or engages in any such other
business activity, there will be no offset, reduction or effect on any rights,
benefits or payments to which the Employee is entitled pursuant to this
Agreement. Furthermore, the Employee will have no obligation to account for,
remit, rebate or pay over to the Company any compensation or other amounts he
earns or derives in connection with such additional employment or business
activity. The Employee will, however, make himself generally available for
special projects or to consult with the Company and its employees at such times
and
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at such places as the Company may reasonably request on terms that are
reasonably satisfactory to the Employee and consistent with the Employee's
regular duties and responsibilities in the course of his then new occupation or
other employment, if any.
(f) RETURN OF PROPERTY. On termination of the Employee's Employment,
however brought about, the Employee (or his representatives) will promptly
deliver and return to the Company all the Company's property that is in the
possession or under the control of the Employee (or those representatives).
(g) STOCK OPTIONS. Notwithstanding any other provision of this
Agreement to the contrary: (i) except in the case of a termination of the
Employee's Employment by the Company for Cause or by the Employee Without Good
Reason at any time while on Active Status, all stock options previously granted
to the Employee under Incentive Plans that have not been exercised and are
outstanding as of the time immediately prior to the Termination Date will,
notwithstanding any contrary provision of any applicable Incentive Plan, remain
outstanding (and continue to become exercisable pursuant to their respective
terms) until exercised or the expiration of their term, whichever is earlier;
(ii) in the case of a termination of the Employee's Employment by the Employee
Without Good Reason at any time while on Active Status, all stock options
previously granted to the Employee under Incentive Plans that have not been
exercised and are outstanding and exercisable as of the time immediately prior
to the Termination Date will, notwithstanding any contrary provision of any
applicable Incentive Plan, remain outstanding and continue to be exercisable
until exercised or the date that is 90 days after the Termination Date,
whichever is earlier, whereupon, those options will expire; and (iii) in the
case of a termination of the Employee's Employment by the Company for Cause at
any time while the Employee is on Active Status, all stock options previously
granted to the Employee under Incentive Plans will expire on the Termination
Date. No stock option previously granted to the Employee under any Incentive
Plan will, notwithstanding any contrary provision of that Incentive Plan, expire
or fail to become exercisable or, if exercisable, cease to be exercisable by
reason of either (i) the occurrence of the Employee's Part-time Employment
Effective Date or (ii) the Employee's service during the Part-time Employment
Period being less than full-time.
(h) NO CONSTRUCTIVE TERMINATION. Except in the case of a termination
of the Employee's Employment which results from the Employee's death, no
termination of the Employee's Employment will be effective for any purpose
hereunder unless the Terminating Party delivers a Notice of Termination to the
Nonterminating Party. An offer by the Employee to resign from an office or the
Board or otherwise to step aside will not, whether in writing or oral,
constitute a Notice of Termination by the Employee.
Section 6. OTHER EMPLOYEE RIGHTS (a) PAID VACATION AND Holidays. The
Employee will be entitled to not less than five weeks of annual vacation and all
legal holidays during which times his applicable compensation will be paid in
full.
12
(b) BUSINESS EXPENSES. The Employee is authorized to incur, and will
be entitled to receive prompt reimbursement for, all reasonable expenses the
Employee incurs in performing his duties and carrying out his responsibilities
hereunder, including (i) business meals and entertainment and travel expenses
and (ii) mileage reimbursements in accordance with the Company's automobile
expense reimbursement policy as in effect at the time those expenses are
incurred, provided that the Employee complies with the applicable policies,
practices and procedures of the Company relating to the submission of expense
reports, receipts or similar documentation of those expenses. The Company will
either pay directly or promptly reimburse the Employee for those expenses not
more than 30 days after the submission to the Company by the Employee from time
to time of an itemized accounting of those expenses for which direct payment or
reimbursement is sought. Unpaid reimbursements after that 30-day period will
accrue interest in accordance with Section 9(i).
(c) NO FORCED RELOCATION. The Employee will not be required to move
his principal place of residence from the metropolitan San Francisco, California
area or to perform regular duties that could reasonably be expected to require
either such move against his wish or his spending amounts of time each week
outside the metropolitan San Francisco, California area which are unreasonable
in relation to the duties and responsibilities of the Employee hereunder, and
the Company agrees that, if it requests the Employee to make such a move and the
Employee declines that request, that declination will not constitute any basis
for a determination that Type II Cause exists.
Section 7. COVENANT NOT TO COMPETE. (a) The Employee recognizes that
in each of the highly competitive businesses in which the Company will be
engaged following the Effective Date, personal contact is of primary importance
in securing new customers and in retaining the accounts and goodwill of present
customers and protecting the business of the Company. The Employee, therefore,
agrees that during the term of his Employment and for a period of three years
after the Termination Date, he will not, within 75 miles of each geographic
location in which he has devoted substantial attention at such location to the
material business interests of the Company (the "Relevant Geographic Areas"):
(i) accept employment or render service to any Person that is engaged in a
business directly competitive with the business then engaged in by the Company
or (ii) enter into or take part in or lend his name, counsel or assistance to
any business, either as proprietor, principal, investor, partner, director,
officer, employee, consultant, advisor, agent, independent contractor, or in any
other capacity whatsoever, for any purpose that would be competitive with the
business of the Company (all of the foregoing activities are collectively
referred to as the "Prohibited Activity"). Notwithstanding the foregoing, the
Employee may own and hold as a passive investment up to 5% of the outstanding
shares of any class of capital stock (or other equity interest) in a competing
corporation, limited liability company, limited partnership or other entity if
that class of capital stock (or other equity interest) is listed on a national
stock exchange or included in the Nasdaq National Market.
(b) In addition to all other remedies at law or in equity which the
Company may have for breach of a provision of this Section 7 by the Employee, it
is agreed that in the event of any
13
breach or attempted or threatened breach of any such provision, the Company will
be entitled, on application to any court of proper jurisdiction, to a temporary
restraining order or preliminary injunction (without the necessity of (i)
proving irreparable harm, (ii) establishing that monetary damages are inadequate
or (iii) posting any bond with respect thereto) against the Employee prohibiting
such breach or attempted or threatened breach by proving only the existence of
such breach or attempted or threatened breach. If the provisions of this Section
7 should ever be deemed to exceed the time, geographic or occupational
limitations applicable law permits, the Employee and the Company agree that
those provisions will be and are hereby reformed to the maximum time, geographic
or occupational limitations applicable law permits.
(c) The covenants of the Employee in this Section 7 are independent
of and severable from every other provision of this Agreement; and the breach of
any other provision of this Agreement by the Company or the breach by the
Company of any other agreement between the Company and the Employee will not
affect the validity of the provisions of this Section 7 or constitute a defense
of the Employee in any suit or action brought by the Company to enforce any of
the provisions of this Section 7 or seek any relief for the breach thereof by
Employee.
(d) The Employee acknowledges, agrees and stipulates that: (i) the
terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to or of which the terms and provisions of this
Section 7 are ancillary or a part; (ii) the consideration provided by the
Company under this Agreement is not illusory; and (iii) the consideration given
by the Company under this Agreement, including the provision by the Company of
Confidential Information to the Employee as Section 8 contemplates, gives rise
to the Company's interest in restraining and prohibiting the Employee from
engaging in the Prohibited Activity within the Relevant Geographic Areas as this
Section 7 provides and the Employee's covenant not to engage in the Prohibited
Activity within the Relevant Geographic Areas pursuant to this Section 7 is
designed to enforce the Employee's consideration (or return promises) including
the Employee's promise in Section 8 to not disclose Confidential Information.
Section 8. CONFIDENTIAL INFORMATION. The Employee acknowledges that
he has had and will continue to have access to various Confidential Information.
The Employee agrees, therefore, that he will not at any time, either while
employed by the Company or afterwards, make any independent use of, or disclose
to any other person (except as authorized by the Company) any Confidential
Information. Confidential Information will not include (a) information that
becomes known to the public generally through no fault of the Employee, (b)
information required to be disclosed by law or legal process or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (b), the Employee will give prior
written notice thereof to the Company and provide the Company with the
opportunity to contest that requirement, or (c) the Employee reasonably believes
that disclosure is required in connection with the defense of a lawsuit against
the Employee. In the event of a breach or threatened breach by the Employee of
the provisions of this Section 8 with respect to any Confidential Information,
the Company will be entitled to a temporary restraining order and a preliminary
and permanent injunction (without the necessity of posting any bond in
connection
14
therewith) restraining the Employee from disclosing, in whole or in part, that
Confidential Information. Nothing herein will be construed as prohibiting the
Company from pursuing any other available remedy for that breach or threatened
breach, including the recovery of damages.
Section 9. GENERAL PROVISIONS. (a) SEVERABILITY. If any one or more
of the provisions of this Agreement shall, for any reason, be held or found by
final judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, (i) that invalidity, illegality or
unenforceability will not affect any other provisions of this Agreement and (ii)
this Agreement will be construed as if that invalid, illegal or unenforceable
provision had never been contained herein (except that this clause (ii) will not
prohibit any modification allowed under Section 7(b)).
(b) NONEXCLUSIVITY OF RIGHTS. Nothing herein will prevent or limit
the Employee's continuing or future participation in any Compensation Plan or,
subject to Section 9(k), limit or otherwise affect such rights as the Employee
may have under any other contract or agreement with the Company. Vested benefits
and other amounts to which the Employee is or becomes entitled to receive under
any Compensation Plan on or after the Termination Date will be payable in
accordance with that Compensation Plan, except as expressly modified hereby.
(c) SUCCESSORS. (i) This Agreement is personal to the Employee and,
without the prior written consent of the Company, is not assignable by the
Employee otherwise than by will or the laws of descent and distribution. This
Agreement will inure to the benefit and be enforceable by the Employee's legal
representatives (including any duly appointed guardian) acting in their
capacities as such pursuant to applicable law.
(ii) This Agreement will inure to the benefit of and be binding on
the Company and its successors and assigns. If, at any time prior to the
Termination Date, the Employee is not an Executive Officer, the Company will be
entitled to assign all its obligations hereunder to a subsidiary of the Company
and treat the Employee as an employee of that subsidiary for all purposes, but
the Company will remain liable for the full, timely performance of all the
obligations so assigned as if the assignment had not been made.
(iii) The Company will require any successor (direct or indirect and
whether by purchase, merger, consolidation, share exchange or otherwise) to the
business, properties and assets of the Company substantially as an entirety
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would have been required to perform it had no
such succession taken place.
(d) AMENDMENTS; WAIVERS. This Agreement may not be amended or
modified except (i) by a written agreement executed and delivered by the parties
hereto or their respective successors or legal representatives acting in their
capacities as such pursuant to applicable law or (ii) pursuant to the provisions
of Section 7(b) or 9(a).
15
(e) NOTICES. All notices and other communications required or
permitted under this Agreement must be in writing and will be deemed delivered
and received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom the
notice or communication is sent or (ii) if delivered by mail (whether actually
received or not), at the close of business on the third business day (in the
location where the Company then has its principal executive offices) next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties at the address of that
party set forth below (or at such other address as that party may designate by
written notice to the other party in accordance herewith):
(A) if to the Employee, addressed as follows:
Xxxx X. Xxxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: [(000) 000-0000]
(B) if to the Company, addressed as follows:
U.S. Concrete, Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
Facsimile: (000) 000-0000
(f) NO WAIVER. The failure of the Company or the Employee to insist
on strict compliance with any provision of, or to assert any right under, this
Agreement (including the right of the Employee to terminate his Employment for
Good Reason) will not be deemed a waiver of that provision or of any other
provision of or right under this Agreement.
(G) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO
ANY PRINCIPLES OF CONFLICTS OF LAWS.
(h) HEADINGS. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
(i) INTEREST. If any amounts required to be paid or reimbursed to
the Employee hereunder are not so paid or reimbursed at the times provided
herein (including amounts required to be paid by the Company pursuant to
Sections 6 and 10, those amounts will accrue interest compounded daily at the
annual percentage rate equal to the interest rate shown as the Prime Rate in the
Money Rates column in the then most recently published edition of THE WALL
STREET JOURNAL,
16
or, if that rate is not then so published on at least a weekly basis, the
interest rate announced by The Chase Manhattan Bank (or its successor), from
time to time, as its Base Rate (or prime lending rate), from the date those
amounts were required to have been paid or reimbursed to the Employee until
those amounts are finally and fully paid or reimbursed; provided, however, that
in no event will the amount of interest contracted for, charged or received
hereunder exceed the maximum non-usurious amount of interest allowed by
applicable law.
(j) TAX WITHHOLDING. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that applicable laws or regulations require it to withhold.
(k) ENTIRE AGREEMENT. The Company and the Employee agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Employee by the Company, but has no effect on
any Compensation Plan in which the Employee was participating prior to the
Effective Date.
(l) EFFECTIVE DATE. This Agreement will become effective on
IPO Closing Date (the "Effective Date").
Section 10. PAYMENT OF EXPENSES; RESOLUTION OF DISPUTES. (A) PAYMENT
OF EXPENSES. If at any time during the term hereof or afterwards: (i) there
should exist a dispute or conflict between the Employee and the Company or
another Person as to the validity, interpretation or application of any term or
condition hereof, or as to the Employee's entitlement to any benefit intended to
be bestowed hereby, which is not resolved to the satisfaction of the Employee,
(ii) the Employee must (A) defend the validity of this Agreement or (B) contest
any determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Employee or (iii) the Employee must prepare
responses to an Internal Revenue Service ("IRS") audit of, or otherwise defend,
his personal income tax return for any year the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation arising
therefrom that is occasioned by or related to an audit by the IRS of the
Company's income tax returns, then the Company hereby unconditionally agrees:
(1) on written demand of the Company by the Employee, to provide sums sufficient
to advance and pay on a current basis (either by paying directly or by
reimbursing the Employee) not less than 30 days after a written request therefor
is submitted by the Employee, the Employee's reasonable out-of-pocket costs and
expenses (including reasonable attorney's fees) the Employee incurs in
connection with any such matter; (2) the Employee will be entitled, on
application to any court of competent jurisdiction, to the entry of a mandatory
injunction without the necessity of posting any bond with respect thereto which
compels the Company to pay or advance such costs and expenses on a current
basis; and (3) the Company's obligations under this Section 10(a) will not be
affected if the Employee is not the prevailing party in the final resolution of
any such matter.
(b) RESOLUTION OF DISPUTES. If a dispute of any type referred to in
Section 10(a) arises between the Company and the Employee and they fail to
resolve that dispute by direct
17
negotiation, the Company and the Employee agree that the next step taken to
resolve that dispute, prior to either party initiating any litigation to resolve
that dispute (not including any litigation that may be required to enforce the
Employee's rights to the payment or advancement of expenses and legal fees on a
current basis pursuant to Section 10(a)) will be to submit the dispute to an
agreed Alternative Dispute Resolution ("ADR") process, to which process the
parties will strive diligently in good faith to agree within 10 business days
after either party has given written notice to the other party that it is unable
to concur in the other party's final proposed negotiated resolution of the
dispute. If the Company and the Employee are unable to agree in writing to an
acceptable ADR process within that 10-business day period, then the parties will
submit to a mandatory ADR process by making joint application to the then Chief
United States Federal District Judge in the federal district in which the
Company then has its principal executive offices for the selection of an ADR
process for the parties. The parties will diligently in good faith participate
in the ADR process that judge chooses. If the parties are unable to resolve
their dispute after diligent good faith participation in the ADR process, then
either party will be free to initiate such litigation as that party deems
appropriate under the circumstances. Under no circumstances will the Employee be
obligated to pay for the cost of any ADR process or to pay or reimburse the
Company for any attorneys' fees, costs or other expenses the Company incurs in
connection with any process undertaken by the Employee to resolve disputes under
this Agreement. This Section 10 uses the term "Employee" to include, if the
Employee has died or become incompetent as a matter of applicable law, the
Employee's legal representative acting in his capacity as such under applicable
law.
18
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
U.S. CONCRETE, INC.
By: ____________________________________
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
EMPLOYEE
________________________________________
Xxxx X. Xxxxxxxx
19
