EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into this 23rd day
of May, 2005 by and between COMMERCIAL METALS COMPANY, a Delaware corporation
(the "Employer") and XXXXXX X. XXXXXXX (the "Executive"). The Employer and
Executive are collectively referred to as the "Parties," and individually as a
"Party."
R E C I T A L S:
WHEREAS, Employer has promoted Executive to the position of Executive Vice
President and Chief Operating Officer effective September 20, 2004; and
WHEREAS, the existing employment agreement between Executive and Employer
dated September 1, 1999, as amended July 10, 2000, October 2, 2000 and March 28,
2001 terminates on August 31, 2005 and the Parties desire to assure Executive's
continued employment with Employer by terminating that agreement and entering
into this Agreement to better reflect the responsibilities of Executive's new
position; and
WHEREAS, Executive desires to be employed by Employer in this new position
pursuant to all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed as follows:
1. PURPOSE. The purpose of this Agreement is to formalize the terms and
conditions of Executive's employment with Employer as Executive Vice President
and Chief Operating Officer. This Agreement cannot be amended except by a
writing signed by both Parties.
2. DEFINITIONS. For the purposes of this Agreement, the following words
shall have the following meanings:
(a) "AFFILIATE" or "AFFILIATES" shall mean any corporation,
partnership, joint venture, association, unincorporated organization or
any other legal entity that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the Employer.
(b) "CAUSE" shall mean: (1) any breach by Executive of any material
provision of this Agreement; (2) any act by Executive constituting a
felony or otherwise involving theft, embezzlement, fraud, or gross
dishonesty; (3) any act by Executive involving moral turpitude or willful
misconduct that, in the good faith judgment of Board of Directors of the
Employer either (i) causes material economic harm to the Employer or its
Affiliates (ii) brings substantial discredit to the reputation of the
Employer or any Affiliate, or (iii) damages or interferes with the
relationships of the Employer or any Affiliate with any of their
customers, suppliers, employees or other agents; (4) gross
EMPLOYMENT AGREEMENT PAGE 1
negligence on the part of Executive in the performance of his duties as an
employee, officer, or director of Employer or any Affiliate; (5)
Executive's breach of his fiduciary obligations to Employer, or (6) any
chemical dependence of the Executive which adversely affects the
performance of his duties and responsibilities to Employer.
(c) "CHANGE OF CONTROL" shall mean any of the following: (i) any
consolidation, merger or share exchange of the Employer in which the
Employer is not the continuing or surviving corporation or pursuant to
which shares of the Employer's Common Stock would be converted into cash,
securities or other property, other than a consolidation, merger or share
exchange of the Employer in which the holders of the Employer's Common
Stock immediately prior to such transaction have the same proportionate
ownership of Common Stock of the surviving corporation immediately after
such transaction; (ii) any sale, lease, exchange or other transfer
(excluding transfer by way of pledge or hypothecation) in one transaction
or a series of related transactions, of all or substantially all of the
assets of the Employer; (iii) the stockholders of the Employer approve any
plan or proposal for the liquidation or dissolution of the Employer; (iv)
the cessation of control (by virtue of their not constituting a majority
of directors) of the Board by the individuals (the "Continuing Directors")
who (x) at the date of this Agreement were directors or (y) become
directors after the date of this Agreement and whose election or
nomination for election by the Employer's stockholders, was approved by a
vote of at least two-thirds of the directors then in office who were
directors at the date of this Agreement or whose election or nomination
for election was previously so approved; (v) the acquisition of beneficial
ownership (within the meaning of Rule 13d-3 under the 0000 Xxx) of an
aggregate of 20% of the voting power of the Employer's outstanding voting
securities by any person or group (as such term is used in Rule 13d-5
under the 0000 Xxx) who beneficially owned less than 15% of the voting
power of the Employer's outstanding voting securities on the date of this
Agreement, or the acquisition of beneficial ownership of an additional 5%
of the voting power of the Employer's outstanding voting securities by any
person or group who beneficially owned at least 15% of the voting power of
the Employer's outstanding voting securities on the date of this
Agreement, provided, however, that notwithstanding the foregoing, an
acquisition shall not constitute a Change of Control hereunder if the
acquiror is (x) a trustee or other fiduciary holding securities under an
employee benefit plan of the Employer and acting in such capacity, (y) a
Subsidiary of the Employer or a corporation owned, directly or indirectly,
by the stockholders of the Employer in substantially the same proportions
as their ownership of voting securities of the Employer or (z) any other
person whose acquisition of shares of voting securities is approved in
advance by a majority of the Continuing Directors; or (vi) in a Title 11
bankruptcy proceeding, the appointment of a trustee or the conversion of a
case involving the Employer to a case under Chapter 7.
(d) "CONFIDENTIAL INFORMATION" means information (1) disclosed to or
known by Executive as a consequence of or through his employment with
Employer or Affiliate; (2) not generally known outside Employer or its
Affiliates; and (3) which relates to any aspect of Employer's or
Affiliate's business, research, or development. "Confidential Information"
includes, but is not limited to, Employer's and Affiliate's trade secrets,
proprietary information, business plans, marketing plans, financial
information, compensation and benefit information, cost and pricing
information, customer contacts,
EMPLOYMENT AGREEMENT PAGE 2
suppliers, vendors, and information provided to Employer or Affiliate by a
third Party under restrictions against disclosure or use by Employer or
others.
(e) "CONFLICT OF INTEREST" means any situation in which the
Executive has two or more duties or interests which are mutually
incompatible and may tend to conflict with the proper and impartial
discharge of the Executive's duties, responsibilities or obligations to
Employer, including but not limited to those described in Employer's
Policy of Business Conduct and Ethics (the "Policy") which Executive has
either not disclosed to Employer's Board of Directors or has disclosed and
not been granted a waiver under the provisions of such Policy.
(f) "GOOD REASON" shall mean the occurrence, without Executive's
written consent, of any of the following events: (1) a breach of any
material provision of this Agreement by Employer; (2) a significant
reduction in the authorities, duties, responsibilities, and title of the
Executive as set forth in this Agreement; or (3) Employer's requiring the
Executive, without his consent, to be employed at a location more than
fifty (50) miles from the Employer's present office location in Dallas,
Texas
3. DURATION. This Agreement shall, unless terminated as hereinafter
provided, continue through August 31, 2009. Unless Executive or Employer gives
notice of his or its intent not to renew this Agreement no later than ninety
(90) days prior to its expiration, this Agreement shall automatically continue
in effect for successive additional one (1) year terms subject to all other
terms and conditions contained herein.
4. DUTIES AND RESPONSIBILITIES. Upon execution of this Agreement,
Executive shall diligently render his services to Employer as Executive Vice
President and Chief Operating Officer in accordance with Employer's directives,
and shall use his best efforts and good faith in accomplishing such directives.
Executive shall report directly to the Chief Executive Officer. Executive agrees
to devote his full-time efforts, abilities, and attention (defined to mean not
normally less than forty (40) hours/week) to the business of Employer, and shall
not engage in any activities which will interfere with such efforts. Attached as
Appendix 1 is the Executive's job description.
5. COMPENSATION AND BENEFITS. In return for the services to be provided
by Executive pursuant to this Agreement, Employer agrees to pay Executive as
follows:
(a) SALARY. Executive shall receive an annual base salary of four
hundred thousand dollars ($400,000.00) during the term of this Agreement
This salary may be increased at the sole discretion of Employer's Board of
Directors, but cannot be decreased without Executive's written consent.
(b) DISCRETIONARY BONUS. Executive shall be eligible to receive a
bonus (the "Discretionary Bonus") for each fiscal year of Employer ending
August 31 during the term of this Agreement. The amount of the
Discretionary Bonus shall be determined by, and in the sole discretion of,
Employer's Board of Directors and shall be based upon its evaluation of
Executive's performance during the fiscal year and such other factors or
criteria as it may, in its sole discretion, consider.
EMPLOYMENT AGREEMENT PAGE 3
(c) PAYMENT AND REIMBURSEMENT OF EXPENSES. Employer shall pay or
reimburse the Executive for all reasonable travel and other expenses
incurred by Executive in performing his obligations under this Agreement
in accordance with the policies and procedures of Employer provided that
Executive properly accounts therefore in accordance with such policies and
procedures.
(d) FRINGE BENEFITS AND PERQUISITES. Executive shall be entitled to
participate in or receive benefits under any plan or arrangement generally
made available to the employees or executive officers of Employer,
including the Employer's Key Employee Long-Term Performance and Annual
Incentive Plans and 1996 Long-Term Incentive Plan for equity including
periodic grants of stock options, stock appreciation rights, and/or
restricted stock, all subject to and on a basis consistent with the terms,
conditions, and overall administration of such plans and arrangements and
as approved by Employer's Board of Directors in its sole discretion. To
the extent permitted by law and the terms of Employer's benefit plans,
including Employer's Profit Sharing and 401(k) Plan and Benefit
Restoration Plan, prior service by Executive with a subsidiary of Employer
shall be credited as service with Employer for purposes of vesting of any
benefit. Employer shall furnish Executive with an automobile for the
duration of this Agreement consistent with Employer's policies on
automobiles furnished senior corporate executives.
(e) VACATIONS. In accordance with the policies of Employer,
Executive shall be entitled to the number of paid vacation days in each
calendar year determined by Employer from time to time for its employees
generally, but not fewer than twenty (20) business days in any calendar
year (prorated in any calendar year in which Executive is employed
hereunder for less than the entire year in accordance with the number of
days in such calendar year during which Executive is so employed).
(f) INSURANCE. Employer shall (to the extent Executive elects to
participate in such coverage where optional) provide life insurance
coverage, disability insurance, and hospital, surgical, medical, and
dental benefits for Executive and his qualified dependents, all on such
terms as Employer normally provides such benefits for its salaried
employees and dependents.
6. TERMINATION.
(a) Executive's employment will terminate upon his death, or if he
is unable to perform the functions of his position with reasonable
accommodation for four (4) consecutive months, or for a total of six (6)
months during any twelve (12) month period.
(b) Employer may terminate Executive's employment at any time
without notice for Cause or, following thirty (30) days written notice to
Executive, without Cause.
(c) Executive may terminate his employment upon thirty (30) days
written notice to Employer. In the event Executive terminates his
employment in this manner, he shall remain in Employer's employ subject to
all terms and conditions of this Agreement for the entire thirty (30) day
period unless instructed otherwise by Employer.
EMPLOYMENT AGREEMENT PAGE 4
(d) Executive may terminate this Agreement for Good Reason. Prior to
terminating the Agreement for Good Reason, Executive must give Employer
thirty (30) days advance written notice of his intent to terminate for
Good Reason and the grounds therefore, such that Employer has the
opportunity to cure and/or rectify the alleged breach. Only if Employer
does not cure the alleged breach at the end of thirty (30) days may
Executive terminate for Good Reason.
7. SEVERANCE. Executive shall be entitled to the following compensation
upon termination of his employment resulting from:
(a) TERMINATION RESULTING FROM DEATH OR DISABILITY. In the event
Executive's employment is terminated as a result of his death or
disability, Executive or his estate shall be entitled to the following:
(i) such life insurance or disability benefits as Executive
may be entitled to pursuant to any life or disability insurance then
maintained by the Employer for the benefit of its employees and
executive officers and, in addition thereto, Employer shall pay a
lump sum payment of fifty thousand dollars ($50,000.00) to Executive
or his estate;
(ii) a pro-rata share of Discretionary Bonus in an amount as
determined by Employer's Board of Directors in their sole
discretion, payable no later than November 1 following the end of
Employer's fiscal year during which termination occurs;
(iii) pursuant to the terms and conditions of the Employer's
Key Employee Long-Term Incentive Plan, payment, at such time as all
other participants in that plan receive payment, of any cash
incentive attributable to periods during which Executive was
employed;
(iv) to the extent permitted by the terms and conditions of
Employer's 1996 Long-Term Incentive Plan or other applicable equity
incentive plan(s) and to the extent authorized by the terms of each
of Executive's outstanding award or grant agreements entered into
pursuant to such plan(s), immediate vesting of all stock
appreciation rights, restricted stock, and/or stock options
previously awarded Executive; and
(v) to the extent permitted by the terms and conditions of the
Profit Sharing and 401(k) Plan and Benefit Restoration Plan
maintained by the Employer, crediting of any Employer contribution
to the Executive's account attributable to the plan year during
which termination occurs and accelerated full vesting of any
previously unvested Employer contributions to the Executive's
account in such plans.
(b) TERMINATION WITHOUT CAUSE BY EMPLOYER OR FOR GOOD REASON BY
EXECUTIVE. In the event Executive's employment is terminated without Cause
by the Employer or for Good Reason by the Executive, Executive shall be
entitled to the following:
EMPLOYMENT AGREEMENT PAGE 5
(i) lump sum payment of an amount equal to 1.5 times
Executive's then current annual base salary;
(ii) a cash payment in lieu of Discretionary Bonus equal to
1.5 times the average annual Discretionary Bonus received by
Executive for the five year period ended with Employer's last
complete fiscal year prior to termination without Cause by the
Employer or for Good Reason by the Executive; and
(ii) all those additional amounts described above in 7(a)ii,
iii, iv and v.
(c) TERMINATION FOR CAUSE. In the event Executive's employment is
terminated for Cause the Executive shall not be entitled to compensation.
(d) TERMINATION WITHOUT CAUSE BY EMPLOYER OR FOR GOOD REASON BY
EXECUTIVE WITHIN TWELVE MONTHS FOLLOWING A CHANGE OF CONTROL. If, within
twelve months following a Change in Control, Executive's employment is
terminated by the Employer for any reason other than for Cause, Death or
Disability or if Executive terminates employment for Good Reason during
such twelve month period, Executive shall be entitled to the following:
(i) lump sum payment of two times Executive's then current
annual base salary;
(ii) a cash payment in lieu of Discretionary Bonus equal to
two times the average annual Discretionary Bonus received by
Executive for the five year period ended with Employer's last
complete fiscal year prior to the Change of Control; and
(iii) all those additional amounts described above in 7
(a)iii, iv and v.
(e) EMPLOYER'S NON-RENEWAL OF AGREEMENT. In the event, pursuant to
Paragraph 3, the Employer elects not to renew this Employment Agreement,
either at the end of the initial term or any successive one year
extension, Executive shall receive a lump sum payment of one hundred
thousand dollars ($100,000.00).
8. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Employer and
Executive acknowledge and agree that while Executive is employed pursuant to
this Agreement, he will have access to Confidential Information of Employer and
its Affiliates, will be provided with specialized training on how to perform his
duties; and will be provided contact with Employer's and Affiliates' customers
and potential customers. In consideration of all of the foregoing, Employer and
Executive agree as follows:
(a) NON-COMPETITION DURING EMPLOYMENT. Executive agrees that for the
duration of this Agreement, he will not compete with Employer by engaging
in the conception, design, development, production, marketing, sourcing or
servicing of any product or service that is substantially similar to the
products or services which Employer or Affiliates provides, and that he
will not work for, in any capacity, assist, or become
EMPLOYMENT AGREEMENT PAGE 6
affiliated with as an owner, partner, etc., either directly or indirectly,
any individual or business which offers or performs services, or offers or
provides products substantially similar to the services and products
provided by Employer or Affiliates.
(b) NON-COMPETITION AFTER EMPLOYMENT. Executive agrees that for a
period of eighteen months after termination of his employment with
Employer for any reason other than for Executive's termination for Good
Cause or Employer's non-renewal of this Agreement, he will not compete
with Employer or Affiliates by engaging in the conception, design,
development, production, marketing, sourcing or servicing of any product
or service that is substantially similar to the products or services which
Employer or Affiliates provides, and that he will not work for, in any
capacity, assist, or become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual or business which offers or
performs services, or offers or provides products substantially similar to
the services and products provided by Employer or Affiliates .
(c) CONFLICTS OF INTEREST. Executive agrees that for the duration of
this Agreement, he will not engage, either directly or indirectly, in any
Conflict of Interest, and that Executive will promptly inform the Chairman
of the Audit Committee of Employer's Board of Directors as to each offer
received by Executive to engage in any such activity. Executive further
agrees to disclose to Employer any other facts of which Executive becomes
aware which might involve or give rise to a Conflict of Interest or
potential Conflict of Interest.
(d) NON-SOLICITATION OF CUSTOMERS AND EMPLOYEES. Executive further
agrees that for a period of eighteen months after the termination of this
Agreement for any reason other than for Employer's non-renewal of this
Agreement he will not either directly or indirectly, on his own behalf or
on behalf of others (i) solicit or accept any business from any customer
or supplier or prospective customer or supplier with whom Executive
personally dealt or solicited at any time on or after September 1, 1999 on
behalf of Employer or Affiliates, or (ii), solicit, attempt to hire, or
hire any employees of Employer or Affiliates to work for Executive or for
any other entity, firm, corporation, or individual..
(e) CONFIDENTIAL INFORMATION. Executive further agrees that he will
not, except as Employer may otherwise consent or direct in writing, reveal
or disclose, sell, use, lecture upon, publish, or otherwise disclose to
any third party any Confidential Information or proprietary information of
Employer or Affiliates, or authorize anyone else to do these things at any
time either during or subsequent to his employment with Employer. If
Executive becomes legally compelled by deposition, subpoena or other court
or governmental action to disclose any Confidential Information, then the
Executive shall give Employer prompt notice to that effect, and will
cooperate with Employer if Employer seeks to obtain a protective order
concerning the Confidential Information. Executive will disclose only such
Confidential Information as his counsel shall advise is legally required.
Executive agrees to deliver to Employer, at any time Employer may request,
all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in electronic format on a computer hard drive, disk or in other
form (and all copies of all of the foregoing), relating to the businesses,
operations or affairs of Employer or any Affiliates and any other
Confidential
EMPLOYMENT AGREEMENT PAGE 7
Information that Executive may then possess or have under his control.
This section shall continue in full force and effect after termination of
Executive's employment and after the termination of this Agreement for any
reason, including expiration of this Agreement. Executive's obligations
under this section of this Agreement with respect to any specific
Confidential Information and proprietary information shall cease when that
specific portion of Confidential Information and proprietary information
becomes publicly known, in its entirety and without combining portions of
such information obtained separately and without breach by Executive of
his obligations under this Agreement. It is understood that such
Confidential Information and proprietary information of Employer and
Affiliates includes matters that Executive conceives or develops, as well
as matters Executive learns from other employees of Employer or
Affiliates.
(f) BREACH. Executive agrees that any breach of Paragraphs 8(a),
(b), (c), (d) or (e) above cannot be remedied solely by money damages, and
that in addition to any other remedies Employer may have, Employer is
entitled to obtain injunctive relief against Executive. Nothing herein,
however, shall be construed as limiting Employer's right to pursue any
other available remedy at law or in equity, including recovery of damages
and termination of this Agreement. If the Executive is found to have
violated Paragraph 8 (b), the Parties agree that the duration of the
non-competition period set forth therein shall be automatically extended
by the same period of time that Executive is determined to have been in
violation of the restriction.
9. ASSIGNMENT. This Agreement may be assigned by Employer, but cannot be
assigned by Executive.
10. BINDING AGREEMENT. Executive understands that his obligations under
this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.
11. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as follows:
IF TO EXECUTIVE: IF TO EMPLOYER:
Xxxxxx X. XxXxxxx Xxxxxxx X. Xxxxx - Chairman, CEO,
0000 Xxxxxxxxxx Xxxx xxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000 Commercial Metals Company
0000 X. XxxXxxxxx Xxxx.
WITH A COPY TO: Xxxxx 000
Xxxxxx, Xxxxx 000000
Xxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. WITH A COPY TO:
5400 Renaissance Tower
0000 Xxx Xxxxxx Xxxxx X. Sudbury, Esq.
Xxxxxx, Xxxxx 00000 Commercial Metals Company
0000 X. XxxXxxxxx Xxxx.
Xxxxx 000
Xxxxxx, Xxxxx 000000
EMPLOYMENT AGREEMENT PAGE 8
12. WAIVER. No waiver by either Party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.
13. SEVERABILITY. If any provision of this Agreement is determined to be
void, invalid, unenforceable, or against public policy, such provisions shall be
deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect. Furthermore, any
breach by Employer of any provision of this Agreement shall not excuse
Executive's compliance with the requirements of Paragraph 8 to the extent
otherwise enforceable.
14. ENTIRE AGREEMENT AND UNDERSTANDING. The terms and provisions contained
herein shall constitute the entire agreement between the Parties with respect to
Executive's employment with Employer during the time period covered by this
Agreement. This Agreement replaces and supersedes any and all existing
agreements, including that employment agreement dated September 1, 1999. as
amended, entered into between the Parties. The Parties represent and warrant
that they have read and understood each and every provision of this Agreement,
and that they are free to obtain advice from legal counsel of choice, if
necessary and desired, in order to interpret any and all provisions of this
Agreement, and that both Parties have voluntarily entered into this Agreement.
15. EFFECTIVE DATE. It is understood that this Agreement shall be
effective as of the date hereof and that the terms of this Agreement shall
remain in full force and effect both during Executive's employment and where
applicable thereafter.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
EXECUTIVE EMPLOYER
XXXXXX X. XxXXXXX COMMERCIAL METALS COMPANY
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXXXX X. XXXXX
-------------------------------- -----------------------------------
Xxxxxxx X. Xxxxx
Chairman, President & Chief Executive
Officer
EMPLOYMENT AGREEMENT PAGE 9
