EXECUTIVE SEVERANCE AGREEMENT
Exhibit
10.3
This
Executive Severance Agreement (“Agreement”), including the attached Exhibit “A,”
which is incorporated herein by reference and made an integral part of this
Agreement, is entered into between U.S. Concrete, Inc., a Delaware corporation
(the “Company”), and Xxxxxx X. Xxxxxxxx (“Executive”).
This Agreement is effective as of July 31, 2007 (the “Effective Date”). The
Company and Executive agree as follows:
1. Termination
1.1 Termination
By the Company.
The
Company may terminate Executive’s employment for any of the following
reasons:
a. Termination
for Cause.
For
“Cause” upon the determination by a majority of the Company’s Board of Directors
that “Cause” exists to terminate Executive’s employment. “Cause” means (i)
Executive’s gross negligence, willful misconduct, or willful neglect in the
performance of the material duties and services of Executive to the Company
in
his current Position (as set forth on Exhibit “A” or any Position to which
Executive has been promoted (provided Executive has accepted such promotion);
(ii) Executive’s final conviction of a felony by a trial court, or Executive’s
entry of a plea of nolo
contendere
to a
felony charge; (iii) any criminal indictment of Executive relating to an
event
or occurrence for which Executive was directly responsible which, in the
business judgment of a majority of the Company’s Board of Directors, exposes the
Company to ridicule, shame or business or financial risk; or (iv) a material
breach by Executive of any material provision of this Agreement. If the Company
terminates Executive’s employment for Cause, Executive shall be entitled only to
Executive’s (a) pro rata Monthly Base Salary (as defined in Exhibit “A”) through
the date of such termination, and (b) unused vacation days earned the year
prior
to the year in which Executive’s termination for Cause occurs, plus pro rata
vacation days earned for the year in which Executive’s termination for Cause
occurs. All future compensation and benefits, other than benefits to which
Executive is entitled under the terms of the Company’s compensation and/or
benefit plans, shall cease as of the date of such termination. In the case
of a
termination for Cause under subpart (i) above, (a) all stock options previously
granted by the Company to Executive that are vested on the date of termination
for Cause shall, notwithstanding any contrary provision of any applicable
plan
or agreement covering any such stock option awards, remain outstanding and
continue to be exercisable for a period of 90 days following the date of
termination for Cause (or, if earlier, the expiration of their term), (b)
all
stock options previously granted by the Company to Executive that are not
vested
on the date of termination for Cause shall terminate immediately and (c)
all
restricted stock, restricted stock units and other awards that have not vested
prior to the date of termination for Cause shall be cancelled to the extent
not
then vested. In the case of a termination for Cause under subparts (ii),
(iii)
or (iv) above, (y) all stock options previously granted by the Company to
Executive (whether or not vested) shall terminate immediately and (z) all
restricted stock, restricted stock units and other awards that have not vested
prior to the date of termination for Cause shall be cancelled to the extent
not
then vested.
b. Involuntary
Termination.
Without
Cause at the Company’s option at any time, with or without notice and for any
reason whatsoever, other than death, disability or for Cause, in the sole
discretion of the Company (“Involuntary Termination”). Upon an Involuntary
Termination, Executive shall receive all of the following severance benefits
(provided, however, that, in the event of an Involuntary Termination in
circumstances in which the provisions of Section 1.3 would be applicable,
the
provisions of Section 1.3 will instead apply):
(i) a
lump-sum payment in cash (in accordance with Section 4.10) equal to the Monthly
Base Salary in effect on the date of Involuntary Termination multiplied by
12,
together with a prorated amount of Monthly Base Salary for any partial month
in
which such termination occurs;
(ii) a
lump-sum payment in cash (in accordance with Section 4.10) equal to the amount
of Executive’s (a) target bonus for the bonus year in which Executive’s
Involuntary Termination occurs, prorated based on the number of days in the
bonus year that have elapsed prior to the Involuntary Termination, and (b)
unused vacation days earned the year prior to the year in which Executive’s
Involuntary Termination occurs, plus pro rata vacation days earned in the
year
in which Executive’s Involuntary Termination occurs;
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(iii) provided
that Executive is eligible for and timely elects to receive group medical
continuation coverage under COBRA, the Company will pay 100% of applicable
medical continuation premiums for the benefit of Executive (and his covered
dependents as of the date of his termination, if any) under Executive’s
then-current plan election for 18 months after termination, with such coverage
to be provided under the closest comparable plan as offered by the Company
from
time to time; and
(iv) all
stock
options, restricted stock awards, restricted stock units and similar awards
granted to Executive by the Company prior to the date of Involuntary Termination
shall, notwithstanding any contrary provision of any applicable plan or
agreement covering any such stock options, restricted stock awards, restricted
stock units or similar awards, fully vest and become exercisable in full
on the
date of Involuntary Termination and shall remain outstanding and in effect
in
accordance with their respective terms, and any restrictions, forfeiture
conditions or other conditions or criteria applicable to any such awards
shall
lapse on the date of Involuntary Termination. Executive may exercise any
such
stock options or other exercisable awards at any time before the expiration
of
their term.
c. Death/Disability.
Upon
Executive’s (i) death, or (ii) becoming unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to
last
for a continuous period of not less than 12 months, or (iii) termination
of
employment as a result of becoming permanently and totally unable to perform
Executive’s duties hereunder as a result of any physical or mental impairment
supported by a written opinion by a physician selected by the Company who
is
reasonably acceptable to Executive. Upon termination of employment due to
such
death or disability, Executive or Executive’s heirs shall be entitled to receive
all severance benefits described in Section 1.1.b. as if Executive’s employment
ended due to an Involuntary Termination by the Company as of the date of
death,
date of disability as described in (ii) above, or as of the date of termination
due to permanent and total incapacity as described in (iii) above, except
that
with respect to severance benefits relating to stock options upon termination
of
employment due to death or disability, (a) all stock options previously granted
by the Company to Executive that are vested on the date of termination shall,
notwithstanding any contrary provision of any applicable plan or agreement
covering any such stock option awards, remain outstanding and continue to
be
exercisable in accordance with their terms and (b) all stock options previously
granted by the Company to Executive that are not vested on the date of
termination shall terminate immediately.
1.2 Termination
By Executive.
Executive may terminate Executive’s employment for any of the following
reasons:
a. Termination
for Good Cause.
For
“Good Cause” upon determination by Executive that Good Cause exists to terminate
Executive’s employment. “Good Cause” means, without Executive’s consent, (i) a
diminution in Executive’s then current Monthly Base Salary, (ii) a material
change in the location of Executive’s principal place of employment by the
Company from the “Location” set out on Exhibit “A,” (iii) any material
diminution in Executive’s Position from that set out on Exhibit “A” or any title
or Position to which Executive has been promoted, (iv) any material diminution
of Executive’s authority, duties, or responsibilities from those commensurate
and consistent with the character, status and dignity appropriate to Executive’s
Position or any title or Position to which Executive has been promoted
(provided, however, that if at any time Executive ceases to have such duties
and
responsibilities as are commensurate and consistent with his Position that
are
associated with a publicly traded company because the Company ceases to have
any
securities registered under Section 12 of the Securities Exchange Act of
1934,
as amended, or ceases to be required to file reports under Section 15(d)
of the
Securities Exchange Act of 1934, as amended, then Executive’s authority, duties
and responsibilities will not be deemed to have been materially diminished
solely due to the cessation of such publicly-traded company duties and
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responsibilities),
or (v) any material breach by the Company of any material provision of this
Agreement, any of which remain uncorrected for 30 days following Executive’s
written notice to the Company of Good Cause. Executive must provide such
written
notice to the Company of Good Cause within 90 days of the existence of such
condition. Upon Executive’s termination for Good Cause, Executive shall receive
all of the following severance benefits (provided, however, that, in the
event
of a termination for Good Cause in circumstances in which the provisions
of
Section 1.3 would be applicable, the provisions of Section 1.3 will instead
apply):
(i) a
lump-sum payment in cash (in accordance with Section 4.10) equal to the Monthly
Base Salary in effect on the date of termination for Good Cause multiplied
by
12, together with a prorated amount of Monthly Base Salary for any partial
month
in which such termination occurs;
(ii) a
lump-sum payment in cash (in accordance with Section 4.10) equal to the amount
of Executive’s (a) target bonus for such bonus year, prorated based on the
number of days in the bonus year that have elapsed prior to the termination
for
Good Cause; and (b) unused vacation days earned the year prior to the year
in
which Executive’s termination for Good Cause occurs, plus pro rata vacation days
earned in the year in which Executive’s termination for Good Cause
occurs;
(iii) provided
that Executive is eligible for and timely elects to receive group medical
continuation coverage under COBRA, the Company will pay 100% of applicable
medical continuation premiums for the benefit of Executive (and his covered
dependents as of the date of his termination, if any) under Executive’s
then-current plan election for 18 months after termination, with such coverage
to be provided under the closest comparable plan as offered by the Company
from
time to time; and
(iv) all
stock
options, restricted stock awards, restricted stock units and similar awards
granted to Executive by the Company prior to the date of termination for
Good
Cause shall, notwithstanding any contrary provision of any applicable plan
or
agreement covering any such stock options, restricted stock awards, restricted
stock units or similar awards, fully vest and become exercisable in full
on the
date of termination for Good Cause and shall remain outstanding and in effect
in
accordance with their respective terms, and any restrictions, forfeiture
conditions or other conditions or criteria applicable to any such awards
shall
lapse on the date of termination for Good Cause. Executive may exercise any
such
stock options or other exercisable awards at any time before the expiration
of
their term.
b. Voluntary
Termination.
For any
other reason whatsoever, in Executive’s sole discretion. Upon such voluntary
termination by Executive for any reason other than Good Cause (a “Voluntary
Termination”), all of Executive’s future compensation and benefits, other than
benefits to which Executive is entitled under the terms of the Company’s
compensation and/or benefit plans, shall cease as of the date of Voluntary
Termination, and Executive shall be entitled only to (a) pro rata Monthly
Base
Salary through such date of Voluntary Termination; and (b) unused vacation
days
earned the year prior to the year in which Executive’s Voluntary Termination
occurs, plus pro rata vacation days earned for the year in which Executive’s
Voluntary Termination occurs. In the case of a Voluntary Termination, (i)
all
stock options previously granted by the Company to Executive that are vested
on
the date of Voluntary Termination will remain outstanding and continue to
be
exercisable by Executive until 90 days after the date of Voluntary Termination
(or, if earlier, the expiration of their term), and (ii) all restricted stock,
restricted stock units or other awards that have not vested prior to the
date of
Voluntary Termination shall be cancelled to the extent not then
vested.
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1.3 Termination
Following Change In Control.
In the
event a Change in Control (as defined herein) occurs and within one year
after
the date of the Change in Control either (a) Executive terminates his employment
for Good Cause or (b) the Company or any successor (whether direct or indirect
and whether by purchase, merger, consolidation, share exchange or otherwise)
to
substantially all of the business, properties and/or assets of the Company
makes
an Involuntary Termination of Executive’s employment, then in either case the
Company or its successor
shall be required to provide Executive, and Executive shall receive, all
of the
following Change in Control benefits:
(i) a
lump-sum payment in cash (payable on the termination date) equal to the sum
of
(a) Executive’s Monthly Base Salary in effect on the termination date multiplied
by 12, and (b) the amount of Executive’s full target bonus for such bonus year,
and multiplying the sum of (a) and (b) by the Change in control multiplier
described on Exhibit “A”;
(ii) a
lump-sum payment in cash (payable on the termination date) equal to the unused
vacation days earned the year prior to the year in which Executive’s employment
is terminated, plus pro rata vacation days earned in the year in which
Executive’s employment is terminated;
(iii) provided
that Executive is eligible for and timely elects to receive group medical
continuation coverage under COBRA, the Company will pay 100% of applicable
medical continuation premiums for the benefit of Executive (and his covered
dependents as of the date of his termination, if any) under Executive’s
then-current plan election for 18 months after termination, with such coverage
to be provided under the closest comparable plan as offered by the Company
from
time to time; and
(iv) all
stock
options, restricted stock awards, restricted stock units and similar awards
granted to Executive by the Company prior to the termination date shall vest
in
accordance with Section 3.2.
1.4 Offset.
In all
cases, the compensation and benefits payable to Executive under this Agreement
upon termination of Executive’s employment shall be offset by any undisputed
amounts that Executive then owes to the Company.
1.5 One
Recovery.
In the
event of termination of Executive’s employment, Executive shall be entitled, if
at all, to only one set of severance benefits or Change in Control benefits,
as
applicable, provided in this Agreement.
1.6 Certain
Obligations Continue.
Upon
termination of Executive’s employment, all rights and obligations of Executive
and the Company or its successor under this Agreement shall cease as of the
effective date of termination except that (i) Executive’s obligations under
Article 2 and Sections 4.1 and 4.4 of this Agreement and the Company’s or its
successor’s obligations under Article 3 and Sections 1.1, 1.2, 1.3, 2.6, 4.1 and
4.4 and the Company’s or its successor’s obligations to provide any severance
benefits or Change in Control benefits to Executive shall survive such
termination in accordance with their terms, and (ii) Executive shall be entitled
to receive all compensation (including bonus) earned and benefits and
reimbursements due through the effective date of termination as provided
herein.
1.7 Notice
of Termination.
Any
termination of Executive’s employment shall be communicated by Notice of
Termination to the non-terminating party, given in accordance with this
Agreement. For purposes of this Agreement, “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in
this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated, and (iii) specifies the termination
date, if such date is other than the date of receipt of such
notice.
2.
Confidential
Information; Post-Employment Obligations
2.1 Company
Property.
All
written materials, records, data, and other documents prepared by Executive
during Executive’s employment by the Company are Company property. All
information, ideas, concepts, improvements, discoveries, and inventions that
are
conceived, made, developed, or acquired by Executive individually or in
conjunction with others during Executive’s employment (whether during business
hours and whether on the Company’s premises or otherwise) which relate to the
Company’s business, products, or services are the Company’s sole and exclusive
property. All memoranda, notes, records, files, correspondence, drawings,
manuals, models, specifications, computer programs, maps, and all other
documents, data, or materials of any type embodying such information, ideas,
concepts, improvements, discoveries, and inventions are the Company’s property.
At the termination of Executive’s employment with the Company for any reason,
Executive shall return all of the Company’s documents, data, or other Company
property, including all copies, to the Company.
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2.2 Confidential
Information; Non-Disclosure.
Executive acknowledges that the business of the Company and its affiliated
entities is highly competitive and that the Company will provide Executive
with
access to Confidential Information relating to the business of the Company
and
its affiliated entities. “Confidential Information” means and includes the
Company’s and its affiliated entities’ confidential and/or proprietary
information and/or trade secrets that have been developed or used and/or
are
reasonably planned to be developed and that cannot be obtained readily by
third
parties from outside sources. Confidential Information includes, by way of
example and without limitation, the following: information regarding customers,
employees, contractors, and the industry not generally known to the public;
strategies, methods, books, records, and documents; technical information
concerning products, equipment, services, and processes, particularly mixing
techniques, mix designs or chemical analyses of concrete products; procurement
procedures and pricing techniques; the names of and other information concerning
customers, investors, and business affiliates (such as contact name, service
provided, pricing for that customer, type and amount of services used, credit
and financial data, and/or other information relating to the Company’s
relationship with that customer); pricing strategies and price curves;
positions; plans and strategies for expansion or acquisitions; budgets; customer
lists; research; financial and sales data; trading methodologies and terms;
evaluations, opinions, and interpretations of information and data; marketing
and merchandising techniques; prospective customers’ names and marks; grids and
maps; electronic databases; models; specifications; computer programs; internal
business records; contracts benefiting or obligating the Company or its
affiliated entities; bids or proposals submitted to any third party;
technologies and methods; training methods and training processes;
organizational structure; personnel information, including salaries of
personnel; payment amounts or rates paid to consultants or other service
providers; and other such confidential or proprietary information. Executive
acknowledges that this Confidential Information constitutes a valuable, special,
and unique asset used by the Company and its affiliated entities in its
businesses to obtain a competitive advantage over its competitors. Executive
further acknowledges that protection of such Confidential Information against
unauthorized disclosure and use is of critical importance to the Company
in
maintaining its competitive position. Executive also will have access to,
or
knowledge of, Confidential Information of third parties, such as actual and
potential customers, suppliers, partners, joint venturers, investors, financing
sources and the like, of the Company. The Company also agrees to provide
Executive with access to Confidential Information and specialized training
regarding the Company’s and its affiliated entities’ methodologies and business
strategies, which will enable Executive to perform his job at the
Company.
Executive
agrees that Executive will not, at any time during or after Executive’s
employ-ment with the Company, make any unauthorized disclosure of any
Confidential Information or specialized training of the Company, or make
any use
thereof, except in carrying out his employment responsibilities hereunder.
Executive also agrees to preserve and protect the confidentiality of third
party
Confidential Information to the same extent, and on the same basis, as the
Company’s Confidential Information. Nothing in this Section 2.2 is intended to
prohibit Executive from complying with any court order, lawful subpoena or
governmental request for information, provided that Executive notifies the
Company promptly upon the receipt of any such order, subpoena or request
and
before the date of required compliance.
2.3 Non-Competition
Obligations.
The
Company agrees to and shall provide Executive with immediate access to
Confidential Information. Ancillary to the rights and severance benefits
provided to Executive, the Company’s provision of Confidential Information and
specialized training to Executive, and Executive’s agreement not to disclose
Confidential Information, and in order to protect the Confidential Information
described above, the Company and Executive agree to the following
non-competition provisions. Executive agrees that during Executive’s employment
with the Company and for the “Period of Post-Employment Non-Competition
Obligations” set forth in Exhibit “A,” Executive will not, directly or
indirectly, for Executive or for others, in the “Geographic Region of
Responsibility” described on Exhibit “A” (or, if Executive’s Geographic Region
of Responsibility has changed, in any and all geographic regions in which
Executive has devoted substantial attention at such location to the material
business interest of the Company and its affiliated entities during the 12-month
period immediately preceding Executive’s termination of employment), engage in,
assist, or have any active interest or involvement, whether as an employee,
agent, consultant, creditor, advisor, officer, director, stockholder (excluding
holdings of 2% or less of the stock of a public company), partner, proprietor,
or any type of principal whatsoever in any person, firm or business that
generates more than 10% of its annual revenue from the sale of any
concrete-related products and services that the Company or its affiliated
entities offers, then has plans to offer, or has offered in the preceding
12-month period, including, but not limited to, ready-mixed concrete, pre-cast
concrete or related building materials or services such as proportioned mix
design services, concrete mold engineering or design services, rebar, mesh,
color additives, curing compounds, grouts, wooden forms, or similar products
or
services, whether at wholesale or retail (a “Competing Business”). Executive
understands that the foregoing restrictions may limit Executive’s ability to
engage in certain businesses in the geographic region and during the period
provided for above, but acknowledges that these restrictions are necessary
to
protect the Confidential Information the Company has provided to
Executive.
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2.4 Non-Solicitation
of Customers.
During
Executive’s employment with the Company and for the Period of Post-Employment
Non-Competition Obligations, Executive will not call on, service, or solicit
Competing Business from clients or customers of the Company or its affiliated
entities whom that Executive, within the previous 24 months, (i) provided
services to, worked with, solicited or had or made contact with, or (ii)
had
access to information and files concerning.
2.5 Non-Solicitation
of Employees.
During
Executive’s employment with the Company, and for the Period of Post-Employment
Non-Competition Obligations, Executive will not, either directly or indirectly,
call on, solicit, or induce any other employee or officer of the Company
or its
affiliated entities whom Executive had contact with, knowledge of, or
association with in the course of employment with the Company to terminate
his
employment, and will not assist any other person or entity in such a
solicitation.
2.6 Early
Resolution Conference/Arbitration.
The
parties are entering into this Agreement with the express understanding that
this Agreement is clear and fully enforceable as written. If Executive ever
decides to contend that any restriction on activities imposed by Article 3
of this Agreement is no longer enforceable as written or does not apply to
an
activity in which Executive intends to engage, Executive first will notify
the
Company’s President and its Secretary in writing and meet with a Company
representative at least 14 days before engaging in any activity that foreseeably
could fall within the questioned restriction to discuss resolution of such
claims (an “Early Resolution Conference”). Should the parties not be able to
resolve disputes at the Early Resolution Conference, the parties agree to
use
confidential, binding arbitration to resolve the disputes. The arbitration
shall
be conducted in Houston, Texas, in accordance with the then-current employment
arbitration rules of the American Arbitration Association, before an arbitrator
licensed to practice law in Texas. The parties agree that the arbitrator,
in the
arbitrator’s discretion, may award a prevailing party, a reasonable attorney’s
fee, including arbitration expenses and costs. Either party may seek a temporary
restraining order, injunction, specific performance, or other equitable relief
regarding the provisions of this Section if the other party fails to comply
with
obligations stated herein. The parties’ agreement to arbitrate applies only to
the matters subject to an Early Resolution Conference.
2.7 Warranty
and Indemnification.
Executive warrants that Executive is not a party to any restrictive agreement
limiting Executive’s activities in his employment by the Company. Executive
further warrants that at the time of the signing of this Agreement, Executive
knows of no written or oral contract or of any other impediment that would
inhibit or prohibit employment with the Company, and that Executive will
not
knowingly use any trade secret, confidential information, or other intellectual
property right of any other party in the performance of Executive’s duties
hereunder. Executive shall hold the Company harmless from any and all suits
and
claims arising out of any breach of such restrictive agreement or
contracts.
2.8 Modification.
Executive and the Company agree that if the scope or enforceability of a
restrictive covenant described in this Article 2 is disputed, the arbitrator
or
court with competent jurisdiction may modify and enforce the covenant to
the
extent that it determines the covenant to be reasonable.
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3.
Change
in Control
3.1 Definitions.
a. For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred on the earliest of any of the following dates:
(i) the
date
the Company merges or consolidates with any other person or entity, and the
voting securities of the Company outstanding immediately prior to such merger
or
consolidation do not continue to represent (either by remaining outstanding
or
by being converted into voting securities of the surviving entity) more than
50%
of the total voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;
(ii) the
date
the Company sells all or substantially all of its assets to any other person
or
entity;
(iii) the
date
the Company is dissolved;
(iv) the
date
any person or entity together with its Affiliates (as defined herein) becomes,
directly or indirectly, the Beneficial Owner (as defined herein) of voting
securities representing more than 50% of the total voting power of all then
outstanding voting securities of the Company; or
(v) the
date
the individuals who constituted the non-employee members of the Company’s Board
of Directors (“Incumbent Board”) as of the Effective Date cease for any reason
to constitute at least a majority of the non-employee members of the Board,
provided that for purposes of this clause (v) any person becoming a director
of
the Company whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least 80% of the directors comprising
the Incumbent Board then still in office (or whose election or nomination
was
previously so approved) shall be, for purposes of this clause (v), considered
as
though such person were a member of the Incumbent Board;
provided,
however, that notwithstanding anything to the contrary contained in clauses
(i) - (v), a Change in Control shall not be deemed to have occurred in
connection with any bankruptcy or insolvency of the Company, or any transaction
in connection therewith.
b. As
used
in this Agreement, the following terms are defined as follows:
(i) “Affiliate”
shall mean, with respect to any person or entity, any person or entity that,
directly or indirectly, Controls, is Controlled by, or is under common Control
with such person or entity in question. For the purposes of the definition
of
Affiliate, “Control” (including, with correlative meaning, the terms “Controlled
by” and “under common Control with”) as used with respect to any person or
entity, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person
or
entity whether through the ownership of voting securities or by contract
or
otherwise;
(ii) “Beneficial
Owner” has the meaning ascribed to it pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934; and
(iii) “Parent”
means a corporation, partnership, trust, limited liability company or other
entity that is the ultimate Beneficial Owner of more than 50% of the Company’s
or its successor’s outstanding voting securities.
3.2 Vesting
of Awards.
All
stock options, restricted stock awards, restricted stock units and similar
awards granted to Executive by the Company prior to the date of a Change
in
Control shall, notwithstanding any contrary provision of any applicable plan
or
agreement covering any such stock options, restricted stock awards, restricted
stock units or similar awards, fully vest and become exercisable in full
immediately prior to such Change in Control and shall remain outstanding
and in
effect in accordance with their terms, and any restrictions, forfeiture
conditions or other conditions or criteria applicable to any such awards
shall
lapse immediately prior to such Change in Control. Notwithstanding the
foregoing, any such award that is subject to Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) shall only fully vest and become
exercisable in full immediately upon a “change in ownership or effective
control” as defined in Section 409A that also constitutes a Change in Control as
defined in Section 3.1 above. Executive may exercise any such stock options
or
other exercisable awards at any time before the expiration of their
term.
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After
a
Change in Control, if any option (the “Terminated Option”) relating to the
Company’s capital stock does not remain outstanding, the successor to the
Company or its then Parent shall either:
(a) issue
an
option (the “Successor Option”), to purchase common stock of such successor or
Parent in an amount such that if Executive exercised the Successor Option
immediately after the Change in Control, he would be in the same economic
position as if he had exercised the Terminated Option immediately before
the
Change in Control, with such substitution to be made in accordance with the
requirements of Section 409A of the Code. The aggregate exercise price for
all
of the shares covered by such Successor Option shall equal the aggregate
exercise price of the Terminated Option. The term of such Successor Option
shall
equal the remainder of the term of the Terminated Option (as if the Terminated
Option had remained outstanding) and such Successor Option shall be fully
vested
and exercisable in full on the date of its grant; or
(b) pay
the
Executive a cash amount within 10 days after the consummation of the Change
in
Control, in an amount agreed to by the Company and the Executive. Such amount
shall be at least equivalent on an after-tax basis to the net after-tax gain
that the Executive would have realized if he had been issued a Successor
Option
under clause (a) above and had immediately exercised such Successor Option
and
sold the underlying stock, taking into account the different tax rates that
apply to such cash amount and to such gain, and such amount shall also reflect
other differences to the Executive between receiving a cash amount under
this
clause (b) and receiving a Successor Option under clause (a) above.
3.3 Certain
Additional Payments.
Anything in this Agreement to the contrary notwithstanding, in the event
it
shall be determined that any payment or distribution by the Company or its
successor to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would be subject to the excise tax imposed by Section
4999 of the Code (such excise tax, together with any interest thereon, any
penalties, additions to tax, or additional amounts with respect to such excise
tax, and any interest in respect of such penalties, additions to tax or
additional amounts, being collectively referred herein to as the “Excise Tax”),
then Executive shall be entitled to receive and the Company or its successor
shall make an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes (as defined herein) imposed upon
the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to
the Excise Tax imposed upon the Payment. The Gross-Up Payment shall be made
to
Executive as soon as practicable after written request for payment is submitted
by Executive to the Company or its successor, but in no event later than
the end
of the calendar year next following the year in which Executive remits the
related taxes. For purposes of this Section 3.3, the terms “tax” and “taxes”
mean any and all taxes of any kind whatsoever (including, but not limited
to,
any and all Excise Taxes, income taxes, and employment taxes), together with
any
interest thereon, any penalties, additions to tax, or additional amounts
with
respect to such taxes and any interest in respect of such penalties, additions
to tax, or additional amounts. All determinations made under this Section
3.3,
including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a registered public accounting firm designated by Executive
and
reasonably acceptable to the Company (the “Accounting Firm”). All fees and
expenses of the Accounting Firm shall be borne solely by the Company or its
successor. Notwithstanding anything to the contrary in this Section 3.3,
if any
tax authority determines that a greater Excise Tax should be imposed upon
a
Payment than is determined by the Accounting Firm pursuant to this Section
3.3,
Executive shall be entitled to receive the full Gross-Up Payment calculated
on
the basis of the amount of Excise Tax determined to be payable by such tax
authority from the Company or its successor within 10 days of the Company
receiving written notice of such determination.
4.
Miscellaneous
4.1 Statements
About the Company or Executive.
Except
as may be required to comply with a court order, lawful subpoena or governmental
request for information, Executive and the Company shall refrain, both during
and after Executive’s employment, from publishing any oral or written statements
about the other that are disparaging, slanderous, libelous, or defamatory;
or
that disclose private or confidential information about their business
affairs.
8
4.2 Notices.
Notices
and all other communications hereunder shall be in writing and shall be deemed
to have been duly given when personally delivered or when mailed by United
States registered or certified mail. Notices to the Company shall be sent
to its
President and its Secretary at: U.S. Concrete, Inc., 0000 Xxxxxxxxx, Xxxxx
0000,
Xxxxxxx, Xxxxx 00000. Notices and communications to Executive shall be sent
to
the address Executive most recently provided in writing to the
Company.
4.3
No
Waiver.
No
failure by either party at any time to give notice of any breach by the other
party of, or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of any provisions or conditions of this
Agreement.
4.4 Mediation.
If a
dispute arises out of or relates to Executive’s termination, other than a
dispute regarding Executive’s obligations under Article 3, and if the dispute
cannot be settled through direct discussions, then the Company and Executive
agree to try to settle the dispute in an amicable manner by confidential
mediation before having recourse to any other proceeding or forum. The Company
agrees to pay any pre-suit mediation fee charged by the mediator for two
full
days of mediation.
4.5 Venue/Jurisdiction.
This
Agreement shall be governed by Texas law. Any litigation that may be brought
by
either party involving the enforcement of this Agreement or the rights, duties,
or obligations under this Agreement, shall be brought exclusively in the
State
or federal courts sitting in Houston, Xxxxxx County, Texas.
4.6 Assignment.
This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns. The Company may assign this Agreement to
any
affiliated entity. Executive’s rights and obligations under this Agreement are
personal, and they shall not be assigned or transferred without the Company’s
prior written consent otherwise than by will or the laws of descent and
distribution. The Company will require any successor (direct or indirect
and
whether by purchase, merger, consolidation, share exchange or otherwise)
to
substantially all of the business, properties and assets of the Company
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
succession taken place.
4.7 Other
Agreements/Entire Agreement.
This
Agreement shall supersede any and all existing oral or written agreements,
representations or warranties between Executive and the Company or any of
its
affiliated entities relating to the terms of Executive’s termination by the
Company or any of its affiliated entities, including that certain Employment
Agreement, dated May 28, 2003 between the Company and Executive (the “Initial
Agreement”), and the Initial Agreement is hereby terminated as of the Effective
Date hereof. This Agreement (including Exhibit “A” attached hereto, which is
incorporated herein by reference and made an integral part of this Agreement)
constitutes the entire agreement of the parties with respect to the subject
matters of this Agreement. Any modification of this Agreement (including
without
limitation to Exhibit “A”) will be effective only if it is in writing and signed
by each party.
4.8 Invalidity.
Should
any provision(s) in this Agreement be held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remaining provisions shall be
unaffected and shall continue in full force and effect, and the invalid,
void or
unenforceable provision(s) shall be deemed not to be part of this
Agreement.
4.9 Withholding.
All
payments required to be made to Executive pursuant to this Agreement shall
be
subject to the withholding of amounts relating to income and employment taxes
and other customary employee deductions in conformity with the Company’s payroll
policies in effect from time to time.
9
4.10 Time
of Payments.
All
amounts payable under Sections 1.1.b and 1.2 of this Agreement shall be paid
within 10 days after Executive’s execution without revocation of a release in a
form satisfactory to the Company and within the time period prescribed by
the
Company (which may not be less than 21 days after the date of termination
of
employment). If Executive is a “specified employee,” as such term is defined in
Section 409A and determined as described below in this Section 4.10, any
payments payable as a result of Executive’s termination (other than death) shall
not be payable before the earliest of (i) the date that is six months after
Executive’s termination, (ii) the date of Executive’s death, or (iii) the date
that otherwise complies with the requirements of Section 409A. This Section
4.10
shall be applied by accumulating all payments that otherwise would have been
paid within six months of Executive’s termination and paying such accumulated
amounts at the earliest date which complies with the requirements of Section
409A. Executive shall be a “specified employee” for the twelve-month period
beginning on April 1 of a year if Executive is a “key employee” as defined in
Section 416(i) of the Code (without regard to Section 416(i)(5)) as of December
31 of the preceding year or using such dates as designated by the Company
in
accordance with Section 409A and in a manner that is consistent with respect
to
all of the Company’s nonqualified deferred compensation plans. For purposes of
determining the identity of specified employees, the Company may establish
procedures as it deems appropriate in accordance with Section 409A.
4.11 Headings.
The
Article and Section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
4.12 Counterparts.
This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be
deemed
to be an original and all of which taken together shall constitute one and
the
same agreement.
IN
WITNESS WHEREOF, the Company and Executive have executed this Agreement in
multiple originals to be effective on the Effective Date.
| Xxxxxx X. Xxxxxxxx (“Executive”) | U.S. Concrete, Inc. (the “Company”) | |||
| By: | /s/ Xxxxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. Xxxxxx | |
|
|
|
|||
|
Date:July
31, 2007
|
|
Printed
Name:Xxxxxxx
X. Xxxxxx
Title:President
& Chief Executive Officer
Date:July
31, 2007
|
||
10
Exhibit
“A” to Employment Agreement Between
The
Company And Xxxxxx X. Xxxxxxxx
|
Position:
|
Executive
Vice President of Sales - Bay Area Region
|
|
Location:
|
San
Jose, California
|
|
Geographic
Region of Responsibility:
|
During
Executive’s employment with the Company, within 75 miles of any plant or
other operating facility in which the Company is then engaged in
business.
Upon
termination of Executive’s employment with the Company, within 75 miles of
any plant or other operating facility in which the Company was
engaged in
business on the date immediately prior to Executive’s termination.
|
|
Change
in control multiplier:
|
2
|
|
Period
of Post-Employment
Non-Competition
Obligations:
|
One
year from the date of termination if Executive’s employment is terminated
for Cause under Section 1.1.a. If Executive’s employment is terminated
under Sections 1.1.b., 1.1.c., 1.2.a. or 1.3 and Executive receives
any
severance benefits or Change in Control benefits, then the Period
of
Post-Employment Non-Competition Obligations shall be the period
of time
equal to the number of months of Monthly Base Salary upon which
severance
benefits or Change in Control benefits were determined. If Executive’s
employment is terminated under Section 1.2.b., then the Period
of
Post-Employment Non-Competition Obligations shall be one year from
the
date of termination. If Executive’s employment is terminated under any
other section of this Agreement, there shall be no Period of
Post-Employment Non-Competition Obligations.
|
|
Monthly
Base Salary:
|
$22,874
or such higher rate as may be determined by the Company from time
to
time
|
|
Annual
Paid Vacation:
|
Four
weeks
|
| Xxxxxx X. Xxxxxxxx (“Executive”) | U.S. Concrete, Inc. (the “Company”) | |||
| By: | /s/ Xxxxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. Xxxxxx | |
|
|
|
|||
|
Date:July
31, 2007
|
|
Printed
Name:Xxxxxxx
X. Xxxxxx
Title:President
& Chief Executive Officer
Date:July
31, 2007
|
||
11
